SMART’s “Always On” data plans: Paying for just the data you need

The Philippines has always been a rather unique fish in the mobile internet sea.

While much of the world pays for mobile data in volume  (like say, AT&T’s 250MB for $15 plan), we have a unique time-based charging system – and until recently all local operators were offering unlimited volumes of data within a specific time period.

The industry standard data rate is typically P20 per hour (a rate unscientifically arrived at a few years ago as being approximately equivalent to an hour’s worth of cybercafe time, hence an acceptable rate for the public). Bucket rates invariably were computed on time as well – 5 hours of data, 24 hours, a week, a month. And all the data you can download in that period.

Charging based on time leads to a somewhat inequitable situation for customers. If it takes you 30 minutes on your phone to read some email, check in Foursquare and loiter around in Facebook clicking on photos for a half hour, that exercise may consume 3 megabytes and will cost P10. The same half hour may be spent by someone else watching a youtube video and consuming 200MB of data.

This drives the telco beancounters crazy – obviously the video or download hound’s service uses much more data and has a higher network cost than the thrifty social media gadfly.

But rather than take only the Facebook or IM users’s minuscule data consumption into account, they will also take a look at the worst case scenario – the download hog or streaming video addict consuming vast megabytes of mobile data, and price the service with the possibility of the extreme scenario in mind.

The result is the cost of daily/weekly/monthly unlimited mobile internet plans appear expensive to average consumers, even if by US standards they are quite reasonable. The mobile internet is perceived as exorbitant by the masses,  and no amount of cajoling to get people to incorporate mobile data into everyday lives will prosper if most people consider it expensive.

The smartphone experience demands an always on data connection. An Android phone with all widgets fired up will spend the whole day trying to connect to services, piping out notifications and trying to display the weather around the clock (think HTC Sense). That may not be a lot of actual data, but that constant connection involves time, and lots of it.

But the spectere of having to pay for the connection 24/7 spooks consumers.

Now comes the question, how to bring the price of data plans down to more affordable levels so you don’t have to break the bank to be connected all day on a smartphone. It’s perfectly logical to have people pay for the actual amount of data they consume, rather than penalize them for the length of the connection. The result is lower prices of data packages.

This solution satisfies both the telco beancounters and the paying public.

Take SMART’s “Always on“ plans for instance. Announced Friday, these packages provide an alternative to the standard P10/30 minute time based charging for people who need to be always connected and use  low data volume apps like messaging, social networking,  and the like.

Here’s the rate table:

To activate a plan, text the keyword ON followed by the plan number and send to 2200.

For example, to buy the 250MB plan which costs P300, text the command ON 300 and send to 2200.

The plan is valid for one month, so you will effectively pay just P300 month for a data plan. You will be ALWAYS connected, and still this is a fraction of the current P1200/month “Unli” rate.

And now comes the howling – “But that’s a CAPPED plan! You only get 250MB! Why, I download much more than that in 30 minutes!”

Well of course it’s capped!! It’s a volume-based data plan!

But see, you’re buying data for a darned PHONE. You’re not going to be downloading torrents during a meeting. You are probably going to be reading email and checking Facebook and Twitter. 200MB was deemed good enough for the majority of smartphone users by US carriers like AT&T. Many analysts believe most users don’t exceed this for most “smartphone” applications.

And if 250MB isn’t enough for your profile, then you can buy 2GB of data for P995/month. This is still cheaper than the regular P1200/month for an unli plan, and cheaper than what AT&T charges (they charge $25/month for 2GB of data)

If you still want to be a data hog, go ahead and buy the higher cost unlimited plan. But honestly, are you going to use more than 2GB on a smartphone? How many hours are you going to sit in a cafe watching YouTube? Maybe it’s time to spring for a small TV instead.

These are new plans, so it’s still early in the game to tell if the idea will catch on.

But if the Philipine market is as price sensitive as conventional wisdom paints it out to be, this may finally be the way to get Filipinos into the “always on” mobile internet lifestyle.