Telcos still taking the Tablets (Doctors fear addiction)

Should we be worried? The desire of telcos to get tablet users onto their networks shows no sign of abating. Yet the evidence shows that the vast majority of users are more than happy with wi-fi connectivity and are unwilling to pay extra for cellular and their associated data plans.

Both Apple and Nokia launched new products this week. Despite the rising popularity and availability of mostly low-end Android tablets, this week’s releases were for the iOS and Windows Phone platforms.

Nokia made its long-awaited entry into the tablet market this week with the launch of its Lumia 2520 running Windows RT 8.1. The 10-inch device includes both wi-fi and cellular (including LTE) connectivity. Shipping is expected later this quarter in the US, UK and Finland, with prices from $499. Telco distribution and connectivity details have not yet been announced, although AT&T Mobile has already said it will support and sell the device.

Apple (as expected) updated its iPad mini with a higher resolution Retina display, and (unexpectedly) refreshed and rebranded its larger companion as the iPad Air. They come with more powerful processors and, like the latest iPhones, are built on a 64-bit architecture. They also include dual antenna MIMO wi-fi and expanded support for more LTE variants.

Research from Localytics a year ago suggested that only 8 per cent of iPad sales were for the combined wi-fi plus cellular models, and that just 6 per cent of online sessions were made over cellular. Apple doesn’t release breakdowns of sales figures, so these are all best-guess estimates. Apple CEO Tim Cook revealed that Apple has now sold 170 million iPads. Assuming a 10 per cent share, then there are likely to be 17m cellular-enabled iPads out there somewhere. That’s not a lot.

It’s the cellular support that delights the telcos. But this capability comes at an optional additional cost of $130 over that of a wi-fi only model. Then, of course, you have to buy a data plan to actually use the networks.

In the US, the iPad’s ‘wi-fi + cellular’ variant is available on AT&T, Sprint, T-Mobile and Verizon under a variety of price plans. As expected, usage caps dominate – there’s still no such thing as an unlimited data plan. Around $50 per month gets you 5-6GB of data. $30 gets you about 2GB. The cheapest option is $15 for 1GB on Sprint or a far less generous 250MB on AT&T (we’re still taking about monthly usage don’t forget…).

T-Mobile USA CEO John Legere tweeted that his company was launching the new iPads in an “uncarrier way of course”. The carrier is offering 200MB a month for free. True, it’s an incredibly small amount of data, but for infrequent cellular users who are only interesting in email and basic browsing, it could be enticing. Enticing enough for them to sign up, and then upgrade later to a more usable package perhaps?

UK pricing is perhaps even more interesting. There are still no unlimited plans, but 3 UK offers a huge 10GB per month for just £15 – certainly the deal of the week. O2 and Orange offer daily plans in addition to their monthly ones, with both telcos giving 200MB a day for just £2. Vodafone has still to announce its pricing plans.

Telcos are determined to get us using tablets on their networks, but most are still pricing them like high-end smartphones. And let’s face it, most iPad owners already have an iPhone or high-end Android smartphone, so why sign up for two data plans? Who’s got that sort of money these days?

Of course, for the past few years we’ve been promised shared data plans. Whilst these are available in limited cases, they are not widespread. Would the option of having a single data plan that works across several devices make tablet cellular use more compelling? Very likely.

It’s obvious that telcos are enthralled by tablets and want us to view them as cellular-first devices, but the reality is that they are being used more like laptops – from fixed locations rather than on the move. If these locations are in the home, at the office or in a coffee shop, chances are high that there’ll be free wi-fi available. Telcos failed to forge closer links with laptop users, despite strenuous efforts to promote embedded cellular modules in devices. Users viewed than as portable, rather than mobile.

Tablets also have a very different distribution model to smartphones. Whilst cellular operators are essential to phone manufacturers through their sales reach and subsidies, the same is not true for tablet manufacturers, who can reach their customers directly.

At least iPads are sold with monthly cellular contracts, and purchasers are not tied into 2-year contracts. The same is not true for many Android tablets.

As an example of tablet use, the BBC has published research on the uptake of its iPlayer service, which show that viewing via tablets and smartphones overtook computers for the first time in September, with 70m requests. However, peak viewing time for iPlayer via tablets is 10pm – in other words, people are switching off their TVs then taking their tablets to bed to continuing their viewing, and that means wi-fi usage, not cellular.

Telcos need to understand that it’s not just about the device, it’s about the experience. Just because someone owns a tablet doesn’t mean they want to use it out and about on a cellular network – pay extra for the privilege. Perhaps the majority of tablet owners think the best place for their device is on the coffee table in the living room (it’s where mine currently is).

Meanwhile, telcos continue with their tablet addiction. It can’t be good for them.

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