Communication industry players have figured out that flat-rate, unlimited data plans aren't so great for business. The move to tiered pricing is a step in the right direction, but it's not a silver bullet either.

Consumers seem to have voracious appetites for mobile data, so there's little risk of serious backlash in mobile data usage as tiered plans become more common. The main threat to the viability of tiered plans is consumer uncertainty: How much will it cost me to look at this website? Is it cheaper to find this place using the GPS on my smartphone or to hail a taxi? Uncertainty leads to dissatisfaction, which leads to churn.

So if unlimited and quota-limited data plans have inherent dangers, what other options exist? By complementing basic plan offerings with solutions that enable a new, subtler breed of application-specific pricing plans, service providers can turn quotas into personal preferences and tiers into the right plans for customers.

Value-based pricing

In most cases, the retail price of a product includes its delivery to a retail store. And even when delivery is extra (like ordering a book from Amazon) the extra cost is attached to a clear value proposition — in this case, faster delivery.

But today's volume-based mobile data plans create a confusing disconnect between content value and content delivery costs. Paying for digital content by the byte replaces the value of the content to the end user with the operator's delivery cost—two things that really have nothing to do with each other.

Service providers need to sell data plans in a meaningful way that directly relates to the value of what's being delivered, not the cost of delivery.

Minutes over megabytes

It's much easier for end users to track time spent rather than volume consumed. Wired.com poses a great idea — apply peak and off-peak times and costs to data. Offer, for example, a data plan that includes 1GB of peak data per month, plus the option to add extra GBs at peak and off-peak rates. That kind of plan is easy to understand and gives end users the flexibility to decide what and when to watch or listen to specific content based on their peak data allotment. (http://www.wired.com/epicenter/2010/07/peak-data-hours/)

Web-integrated packages

Not too many consumers know how much it costs them to access the Internet on their mobile device and send a message via Facebook. So instead of charging for something as abstract as data access, service providers could offer a text-savvy package that includes 1,000 messages (such as SMS, Facebook and Twitter messages) per month. In this example, end users wouldn't need a base plan to access their preferred web-based activities. A service provider could structure a movie buff package more like Netflix and charge per movie rather than per megabyte.

This idea is not about forcing users to pay for something that was free before; it's about recognizing what online actions are valuable to the user and assigning a fair price to them.

Group plans

The next generation of data plans will monetize content awareness, such as parental control. By making it easy for parents to pick and choose what kind of content their kids can access and when, and apply that control to multiple devices, service providers can deliver a more valuable family plan. And service providers could target such a versatile control offering to other customers — employers with employee plans.

Myriad possibilities

It's imperative for service providers to find more dynamic, context- and application-aware versions of plan management that are more relevant to people's lifestyles. Without it, consumers will only be confused and dissatisfied. With it, service providers can take advantage of valuable opportunities to boost customer loyalty and revenue.

Ken Denman, CEO, Openwave