O2 data charges: punishing the many to pay for the few?

11 Jun 2010

O2 has delivered some astonishing statistics to justify its controversial decision to scrap unlimited data plans. In a blog post published by chief executive Ronan Dunne, the company claims that only 0.1% of its customers consume almost a third of the data of the network, while the average O2 user consumes only 200MB of data.

“We don’t think it’s fair that the many should subsidise the behaviour of the few, and we think that we have a responsibility to our customers to address this kind of imbalance,” Dunne stated.

I’ll have you know that I’m the proud holder of A-level maths (grade C), and so I’ve dug my calculator out. By my reckoning:

O2 had 26 million customer accounts at the start of 2010, so it has 26,000 heavy data users

26 million x 200MB = 5,200,000,000 MB total data usage across the network per month

5,200,000,000MB  ÷ 3 = 1,733,333,333MB per month used by the 26,000 heavy data users

That means the average heavy data user consumes a staggering 66,666MB (so around 65GB) per month

Quite how anyone manages to download 65GB per month over a 3G connection is beyond me. You’d have to be running the connection round-the-clock. And indeed, when I put that scenario to O2’s press office, the spokesperson said that’s exactly what’s happening.

But instead of punishing the few to protect the many, O2 has done the exact opposite: it’s put a 500MB cap on previously “unlimited” accounts to ward off the data hogs.

If the rapacious appetites of the minority was causing O2 such a problem, why didn’t it impose a ceiling of, say, 5GB a month? By my calculations (A-level maths, remember) that would still wipe almost a third off O2’s total data traffic and only potentially infuriate a relative handful of its customers.

Instead, 26 million customers are now going to have to keep a careful eye on their data consumption, or risk being hit for excess charges of £5 per 500MB.

O2 insists that 97% of its smartphone customers will be unaffected by the 500MB cap and that the new charges will allow it to better plan investment in its network. “We have invested £½ billion in our network over the last two years; £10bn to date,” an O2 spokesperson told me. “In November 2009 we unveiled plans to accelerate our network growth, totalling £100 million over the coming year. This includes building 1,550 new sites across the UK by the end of this year.”

That’s all well and good, but let’s not pretend  an enormous data bill is destroying O2’s finances. O2 owner Telefonica recently announced annual profits of €1.6 billion, with its earnings statement paying tribute to the enormous growth in revenue from mobile broadband services.

O2’s CEO describes these changes as “fair and transparent”. I’m willing to credit him with the “transparent” bit.

Read more

Blogs