More operators are finding it profitable to abandon “bucket plans” and move to flat rates in their mobile-broadband business cases. Greger Blennerud, Sales Development Director for mobile broadband at Ericsson, says that while there is abundant evidence of the success of unlimited data pricing in today’s HSPA networks, many carriers still have concerns.

“There is a lot of fear in the marketplace, and you hear talk about how operators think the mobile-broadband business case doesn’t fly, that their costs are going through the roof due to heavy traffic,” he says.

But a look at 15 business cases in which Ericsson served as a consultant over the last two years shows that operators in Asia, Western Europe, Latin America and North America maintained comfortable margins by offering unlimited HSPA data usage at flat rates.

Blennerud says the rationale for flat rates is that an operator offering HSPA is actually entering an existing broadband market.

“Mobile broadband is internet access, and the reality is that you’re competing in a space that was already defined by someone else – in this case, DSL operators that have usually offered unlimited usage at a flat price,” he says. “So you have to adopt the business model of that market, and to the expectations of consumers.”

A recent Ericsson Consumer Lab study showed that most people have little understanding of how much data they use. Setting rates according to usage confuses and alienates the customer, who prefers simple choices with the right price points and no surprises, Blennerud says.

“Driving subscriber growth is more important than fixing a value to each byte,” he says. “Traffic increase does affect the business case in terms of capacity need, but not to the extent that lack of subscriber uptake does.”

According to a global analysis conducted at Ericsson, markets where flat pricing is dominant see five to 10 times better mobile broadband take-up than in markets where operators mainly offer bucket pricing.

“We say that, rather than placing a ceiling on revenues, unlimited usage creates a floor,” he says.

On this foundation of connectivity, operators can sell value-added services such as security through firewalls, virus protection and storage back-up. The Ericsson Network Evolution roadmap also makes possible an IMS-based palette of add-ons, such as rich communication, media streaming and video-on-demand, gaming and mobile TV.

Blennerud says that HSPA and HSPA Evolution are capable of handling dramatic increases in data traffic – far beyond current expectations – without sacrificing quality of service. Modeling with such extreme growth projections as an annual 80 percent increase in users’ monthly traffic indicates that operators can easily maintain EBIT margins at or above 20 percent. “This is an unlikely level of traffic growth,” he adds. “Today’s growth on the internet is 30 percent yearly, and most networks see levels below, or far below, 1GB per subscriber per month.”