MWC 2010: Flat-fee mobile data under threat

Ericsson believes the number of connected devices will reach 50 billion in 10 years

Flat-fee deals for mobile broadband will be a thing of the past if global networks are to meet their full potential, according to Ericsson chief executive Hans Vestberg, who compared the mobile market today with that for electrical power in its early days.

"When electricity first came to the street everyone had just one light bulb and paid a flat fee," he said, adding that usage-based charges had to be introduced as the demand for power increased.

Vestberg pointed out that network operators are now talking about 500 per cent penetration of the network, meaning that there are far more devices exchanging data than users.

"It not just people. We have machine talking to machine," he said in a keynote at Mobile World Congress in Barcelona.

Vestberg predicted that network traffic will increase by a factor of at least 25 over the next decade, and that the number of connected devices will reach 50 billion.

Vestberg referred to a demonstration of Ericsson LTE 4G technology achieving speeds of 1Gbit/s. The technology is available to answer the needs of the next decade, the firm said, but a lot more work needs to be done on implementation, including "evolving" business models.

Infrastructure providers need to co-operate far more to deliver seamless networks and manage their complexity, according to Vestberg, which means an agreement on standards.

A departure from flat-fee charging does not necessarily mean introducing per-gigabyte charges, however. One model being discussed in Barcelona is to bundle charges with a service, so that the cost would be included with a downloaded video, for instance.

Ericsson's 1Gbit/s demo sounds impressive, but it used four 20MHz carrier signals, equivalent to a four-lane highway, as well as 4 x 4 Mimo technology. One of the factors holding back LTE is the cost and scarcity of spectrum to support this kind of throughput.