As 4G LTE networks approach capacity limits, many mobile network operators (MNOs) are facing the challenge of providing more bandwidth to meet growing data demands. This requires substantial investment in expanding network capacity, a burden that will only increase as data usage continues to rise.
An analysis using the WiROI Tool reveals that on capacity-limited networks, the cost of delivering each gigabyte (GB) of data is directly linked to the network’s available capacity. As capacity expands, the cost per GB stabilizes but remains nonzero. This financial reality has led many MNOs to phase out unlimited data plans in favor of tiered, consumption-based models, where subscribers pay according to the amount of data they use.
However, some unlimited data plans, initially introduced during the 2G and 3G eras, have been grandfathered into 4G LTE. As a result, these outdated plans are creating an unfair pricing advantage for their holders, to the detriment of newer subscribers who are paying for their data usage based on consumption.
The Issue with Unlimited Data Plans
The problem becomes particularly evident when users with unlimited data plans consume excessive amounts of data—often unintentionally. For instance, some users may forget to switch to Wi-Fi at home or work, stream high-definition videos on cellular networks, or perform large updates like iOS upgrades over cellular data. While the average smartphone user may consume between 500 MB and 1 GB of data per month, heavy data users can consume anywhere from 100 GB to 500 GB monthly.
Statistical analysis conducted with the WiROI Tool shows that under unlimited data plans, the top 5% of heavy data users consume over 50% of a network’s total capacity. This imbalance is depicted in line A (in red) of the tool’s analysis. However, when data caps are introduced, user behavior shifts, resulting in a more equitable distribution of data consumption. As shown in line B (in blue), subscribers are more likely to use Wi-Fi networks at home or work, fostering responsible data consumption habits.
The WiROI Tool further demonstrates how adjusting monthly data caps can help redistribute traffic, leading to a more balanced network.
Unfair Subsidization by Average Subscribers
The cost of delivering a GB of data is relatively constant across a 4G LTE network, meaning heavy data users with unlimited plans effectively pay less per GB than the average subscriber. This disparity forces the majority of subscribers, who practice responsible data usage, to subsidize the consumption of high-data users.
In response to this issue, the cellular industry has implemented traffic-shaping policies such as throttling and rate limiting for users who exceed certain data thresholds. These fair usage policies aim to protect the majority of subscribers from being financially burdened by a small fraction of heavy data users. As long as these policies are communicated, they help ensure that the network remains fair and functional for all users.
Conclusion
The question remains: is it fair for the responsible 95% of subscribers to subsidize the heavy data usage of the 5% who hold grandfathered unlimited plans? As network demands continue to grow, it is clear that fair usage policies and tiered data plans are necessary to maintain equitable pricing and network efficiency in the 4G LTE era.
