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Zero Rating, Lower Prices Change U.S. Mobile Customer Behavior

source: P3

Zero rating does change user behavior. As Facebook has argued, its Free Basics program, which allows mobile users access to a bundle of apps without the need for a data plan, dramatically increases use of mobile Internet apps and creates demand for mobile Internet access.

It now appears that similar programs such as the T-Mobile US "Binge On' program, which zero rates use of video streaming services, also increases usage of streaming apps.

As economic theory also suggests, lower prices for some product in demand will stimulate usage. And that seems to be happening in the U.S. mobile market, as the return of "unlimited usage" plans and bigger usage buckets at lower prices per gigabyte seem to be spurring customers to use more mobile data.

That can be seen most clearly in new research about the amount of mobile app use happening when connected to mobile networks, compared to Wi-Fi networks. Simply, U.S. mobile users are showing more preference for accessing mobile apps when on the mobile network, than when on the Wi-Fi network.

That could indicate less reluctance to use favor apps on the go, since data consumption now is less an issue than before. For users of data plans with zero-rated video streaming, that likely also means customers are not as concerned about data charges, so see no need to flip to Wi-Fi access to avoid such charges.

That might come as a surprise. Most projections about mobile customer use of Wi-Fi suggest the percentage of Wi-Fi connection time is growing, compared to use of mobile network connection time.

And while that might still be true as a general statement, U.S. users of mobile apps seem to be spending more time using the mobile network than Wi-Fi, according to a study conducted by P3 and commissioned by Fierce Wireless.

In the United States, Wi-Fi's share of mobile app connection time has been declining since the beginning of 2016.

source: P3

In January, some 60 percent of the time Verizon subscribers were using a mobile app, those interactions used a Wi-Fi connection.

By August, mobile app use when connected to Wi-Fi dropped to 52 percent.

In January, Sprint subscribers used Wi-Fi for apps 56 percent of the time. By the end of August, Wi-Fi was used for apps 45 percent of the time.

T-Mobile US customers had the smallest decline in Wi-Fi usage for apps.

In January, Wi-Fi connections supported 40 percent of app usage time. By August, that figure was 39 percent.

Users of all the studied networks consume more data on Wi-Fi compared to the mobile network.
Only T-Mobile US customers spend more time using apps on the mobile network. Analysts at P3 believe that is a direct result of T-Mobile US “Binge On” plans that do not count streaming consumption against a data usage plan.

Verizon users show the fewest app sessions, lowest total data consumption and least amount of usage time among the four top U.S. mobile operators. T-Mobile US subscribers are the heaviest users across these categories.

Some would suggest that is because Verizon generally is considered to have the highest prices of the four carriers, while T-Mobile US has been the most-aggressive on price over the past several years.

Basic economic theory suggests that when a supplier lowers the price of some product in demand, customers buy or use more of that product.

The price war now raging in the U.S. mobile market has meant the return of "unlimited use" and "more for your money" plans. That, in turn, seems to be changing consumer behavior, at least where it comes to use of mobile apps.

The other possible contributor to change in behavior is widespread access to faster 4G networks. Where in a 3G environment Wi-Fi tended to be faster than the mobile network, it now often is the case that 4G is faster than Wi-Fi.

To the extent that users switched to Wi-Fi for reasons of speed, that makes less sense, now.

Also, to the extent that users switched to Wi-Fi to conserve usage, the unlimited features and lower cost of mobile data, with bigger buckets of usage, barriers to use of the mobile network also have fallen.

source: P3

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