Video cord cutting and fixed network voice cord cutting are well-known changes in consumer behavior, even if the former represents less than 3 percent of households.
Fixed network voice service cord cutting is well advanced, and represents well over a third of all households in many markets.
So it was inevitable at some point that some consumers would begin cord cutting of their Internet access subscriptions, in some cases going "mobile only" and in other cases using public Wi-Fi.
The amount of such ISP cord cutting is likely to be limited, if ISPs keep tweaking their retail offers to offer more value, at better prices.
The strategic value of any fixed network will in the future be its role as a provider of affordable broadband access (capacity), while the strategic value of a mobile network will be “on the go” connectivity (coverage).
Though mobile network pricing policies can and will change, retail prices almost ensure that mobile access will be significantly more expensive than access provided by a fixed network, sometimes on a “top speed” basis, sometimes on a usage cap basis, sometimes on a cost-per-megabyte basis.
That doesn’t mean some users will opt to rely solely on fixed, or solely on mobile, for their Internet access. Some might rely only on public Wi-Fi. What seems obvious is that future retail pricing policies will shape the choices consumers make.
For those consumers who make choices not to buy mobile or fixed Internet access, the issue normally is cost. So if ISPs can price retail access in ways that provide enough value, at reasonable enough prices, many would-be Internet access service “cord cutters” will simply conclude that the value exceeds the price.
At the moment, mobile broadband uptake is growing in part because a smart phone cannot be used to best effect without such access. In other cases, use of a smart phone comes with a requirement for buying a mobile data plan of some sort.
The United Kingdom’s EE sells 500 MB service, without a contract, for £23 (U.S. $35), with unlimited domestic calling and texting.
£28 ($42) buys a 1 GB data usage allotment. For £33 ($50), a user can get a 3GB plan, while £38 ($57) provides a 5GB usage plan.
For £43 ($65), a user gets 8GB and for £63 ($95) gets 20GB of usage.
Those prices imply a cost per GB ranging from $68 at the lowest tier down to $4.75 at the 20-GB level. A 5-GB usage plan features gigabytes priced at about $11.
AT&T (News
- Alert) prices individual plan gigabytes at $10 per gigabyte, generally speaking. Family Share plans are more complicated, since there is a shared data plan, plus separate charges for each connected device. But total costs can range up to $25 per gigabyte or more, depending on which plan, and which devices, are connected.
Fixed wireless providers tend to sell usage at prices between $5 and $10 a gigabyte. Urban telco and cable providers tend to sell usage at prices between $4 and $5 a gigabyte at the low end.
Google (News
- Alert) Fiber cannot be evaluated in this way, because Google Fiber has no usage caps at all.
Ultimately, ISPs will be able to limit the amount of Internet access service cord cutting by increasing value and doing a better job on retail price.
Edited by Alisen Downey