A Brief History of Mobile Phone Plans: From Voice and Data to Multi-metric Monetization

The evolution of mobile plans over the past few decades offers valuable insights on network capability monetization, market segmentation, and application innovation.

Mobile plans have been an indispensable part of cellular usage since the earliest mobile phones emerged about five decades ago. Mobile phone plans represent a lot more than contractual agreements between operators and users. They show how operators monetized networks and other resources in specific eras, such as voice and SMS monetization in the 2G and 3G eras, traffic monetization in the 4G era, and multi-dimensional monetization in today's 5G/5.5G era.

Phone plans also reflect how operators position themselves, whether as connectivity service providers or providers of one-stop life services including connectivity, entertainment, finance, and security. Moreover, they reflect operators' market focus, whether on loyal customer groups with greater spending power who prefer old models, or youngsters and tech enthusiasts who embrace data and freedom. Furthermore, plans reflect operators' approaches to market competition, including how they price main plans and how they adjust their market strategies.

2004: Classic age of voice services and SMS

In early January 2004, the Guardian reported on the number of text messages sent over the previous year hitting a record high (Figure 1). Back then, media headlines featuring SMS were commonplace, and mobile phone plans typically featured voice services (Figure 2) and were priced by different metrics, including time (evenings and weekends), location (domestic and roaming), and called number (in- and out-of-network).

Figure 1: Record number of text messages in the UK in 2003( Source: The Guardian )

Figure 2: T-Mobile US plans in 2004: Multi-metric monetization featuring voice services

Table 1: Mobile phone market in 2003, 2013, and 2023（Source: IDC）

Back then, there were 1.4 billion mobile users globally, and they generated nearly US$450 billion in revenue. Given the then global population of 6.4 billion, there was huge untapped potential. The best-selling mobile phone brand at the time was Nokia from Finland (Table 1), and Apple's first-generation iPhone would not be released until more than three years later. This was when China had just joined the World Trade Organization (WTO). China Mobile's M-zone plan was hugely popular among young students partly thanks to its ambassador, pop idol Jay Chou. Meanwhile, Easyown, the operator's entry-level prepaid plan, was also well-received across the country, from urban to rural areas.

2014: Golden age of data

Fast forward to a decade later. Global annual smartphone shipments surpassed 1 billion for the first time in 2013 (Table 1). SMS and voice services could no longer play a meaningful role in most operators' service plans when it came to monetization (Figure 3). Operators were shifting to data monetization.

Figure 3: Mobile phone plans of Deutsche Telekom in Q1 2014 (Source: DT's financial report)

Building on user preferences for wireless access from the 3G era, Finnish operators started to charge users by speed, based on either 3G or 4G (Figure 4), driving "Mobile Everywhere" further. This resulted in mobile data usage in Finland, a country with only 5.5 million people, surpassing that in Germany, which had a population of over 83 million people in 2015 (Figure 5).

Figure 4: Mobile phone plans of DNA in Finland in 2014 (Source: DNA)

Figure 5: MBB traffic in Germany and Finland (2011–2017) (Source: Tefficient）

2024: Diversification with multi-metric monetization

Today, global mobile revenues exceed US$1 trillion (US$1.11 trillion recorded in 2023). By the end of 2023, 64% of countries and regions had recorded an over 100% penetration of mobile connections (excluding IoT) (source: GSMA). Operators have been refining their monetization models for their large customer bases. We see three major trends in service plans (Figure 6).

Figure 6: 5G pricing model trends (Q1 2024) (Source: Omdia)

Trend 1: Multi-metric models for monetizing network capabilities are emerging

In the 4G era, most data monetization models were not based on differentiated uplink and downlink or different QoS levels. Unrefined data monetization models with 4G drove rapid growth in the mobile Internet, but this also meant lower revenue per GB and slower data revenue growth for operators. In the China market, for example, revenue per GB decreased from CNY150 in 2013 to CNY5 in 2019, and the annual growth rate of mobile data revenue was only 2% in 2019. The need for more refined data monetization and improved user experience with 5G and 5.5G has made it possible to monetize QoS.

Depending on different metrics, operators can monetize speed (mainly downlink), uplink, and latency.

(1) Speed-based monetization

Speed-based monetization, mostly in the downlink, can be realized by different models, including hot-spot-based booster (through add-on packages), VIP user benefits (as part of network benefits of VIP service plans), and speed-based plans.

Hotspot-based booster is about giving users add-on packages for better user experience within certain time periods in areas with network congestion. Following China Unicom Beijing's trial of a Universal Studios acceleration package (CNY19.9 per 30 minutes) in 2021, AIS Thailand and Telefonica Spain launched 5G add-on package services (Figure 7 and Figure 8), which are accessed through the operators' own apps and monetized by duration. AIS's 5G booster add-on is valid for 3 hours, and Telefonica's has three options: 15, 30, or 60 minutes. The operators monetize differently in that AIS charges THB49 (23% of AIS's ARPU), while Telefonica charges by user tokens as a means of improving user stickiness and loyalty.

Figure 7: AIS's 5G booster add-on launched in Dec 2023 （Source: AIS）

Figure 8: Telefonica's Smart Mobile add-on package launched in Jan 2024（Source: Telefonica）

Network benefits, alongside other types of benefits, enable brand premium from VIP services. A recent example is the SUPREME plans of 3 Hong Kong, which provides three major benefits for local premium users (Table 2).

Prioritized Access	Superior Service	Lifestyle Platform
Higher network priority for SUPREME users (QCI setting) Dedicated icon displays for SUPREME users (the "3" icon is displayed for regular users)	Personal assistant services SUPREME flagship stores Dedicated website and app	Food, shopping, entertainment, and performance

Table 2: Three major benefits for SUPREME users (Source: SUPREME)

The SUPREME plans, launched in March 2023, have achieved remarkable results. They have not only improved 3 Hong Kong's competitiveness among premium users, but significantly improved the operator's ARPU. According to 3 Hong Kong's 2023 financial report, SUPREME's ARPU is 257% higher than non-SUPREME services (Figure 9).

Figure 9: Significantly higher ARPU of SUPREME
(Source: 3 Hong Kong's FY 2023 financial report)

Started in Finland, speed-based charging has become increasingly popular among operators around the world in the 5G era. According to Omdia, by Q1 2024, 21% of global 5G operators had adopted speed-tiered pricing. In Europe in particular, about one-third of operators have launched similar speed-based mobile plans. Speed-tiered plans can be delivered in two charging models: hybrid charging by both data and speed and charging by speed only. One example of hybrid charging is KPN's plans launched this February in the Netherlands. Their premium plans are charged by speed, while mid-range and entry-level plans are charged by data. An example of purely speed-based charging is Vivacom's 5G plans in Bulgaria. Vivacom delivers excellent network experience (ranking among the global top 10 in Opensignal's 5G speed benchmark^[3]). From a global business practices perspective, speed monetization is naturally the next stage for data monetization. It enables operators to increase ARPU, as witnessed in KPN's recent launching of speed-tiered plans, Vivacom's three-year history of offering such plans, or DNA's decade-long use of speed-based pricing (Figure 10).

Figure 10: Significant increases in the ARPU of KPN, Vivacom, and DNA (Sources: Operators' financial reports and GSMA)

(2) Uplink monetization

Uplink livestreaming plans are becoming a key tool for livestream sellers with high QoS requirements and strong spending power. At least 30 provincial operators in China, including China Unicom Guangdong and China Mobile Guangxi, have commercially launched 5G livestreaming plans (Figure 11). Hong Kong Telecom (HKT), 3 Hong Kong, and AIS Thailand have also launched dedicated 5G plans for uplink livestreaming. Active live e-commerce platforms, such as the top platforms in Indonesia in 2023 like Shopee Live, TikTok Live, Lazada Live, and Tokopedia (source: Ipsos, Jan 2024), are also enabling the ecosystem to thrive.

Figure 11: Uplink livestreaming plans of China Unicom Guangdong (Source: China Unicom Guangdong)

(3) Latency monetization

There are already preliminary business practices for accelerating latency-sensitive applications, such as mobile gaming and finance (Figure 12). 5G's air interface performance advantages are not yet fully showcased in settings like non-standalone (NSA) architecture and remote application servers. Current latency optimization solutions in the industry include localizing application servers (e.g., game servers), optimizing the architecture (SA), and deploying mobile edge computing (MEC).

Figure 12: China Unicom's 5G gaming booster plan and 3 Hong Kong's gaming plan (Source: China Unicom and 3 Hong Kong）

Trend 2: Developing users in market segments

Unlike previous forms of user segmentation that were mainly based on connectivity services (e.g., China Mobile's M-zone campus plans provided more data), operators in the 5G era can provide differentiated digital services for new segmented scenarios to unlock new monetization methods and explore opportunities in more user segments.

Since the 2G era, user segmentation has evolved in three areas (Table 3).

First, different segments of users were previously distinguished using customized connectivity services (data, call, and SMS). In the 5G era, operators have taken a step forward by providing differentiated experience based on both connectivity and digital services for different user segments.

Customized services Market segment +	Big data Market segment +	Digital services/benefits
China Mobile's plans for delivery service personnel: Abundant calling minutes and high data volumes offered for professionals in verticals like delivery, logistics, and online car-hailing, as well as services like smart helmets, Migu video membership, and worry-free battery swap China Mobile's plans for the elderly:	China Mobile's plans for the elderly: (1) Three anti-fraud services: Cloud-based blocking of harassment calls, pop-up notifications for suspected scams, and anti-fraud insurance. (2) Digital health products, e.g., online health consultation and cloud storage of health data	HKT/CSL's pet tracking service plans: (1) Pet positioning service (2) Ambulance service
Market potential (China): 84 million truck drivers, online car-hailing drivers, couriers, and food delivery riders (Source: All-China Federation of Trade Unions, 2023)	Market potential: 290 million people aged 60 and above in China by the end of 2023, with continued growth in recent years and an over 100 million increase in the past decade (Source: Ministry of Civil Affairs of China, 2024)	Market potential: 242,000 (9.4% of total) Hong Kong households with pets (Source: Census and Statistics Department of Hong Kong, 2018)

Table 3: Three changes in user segmentation (Source: Operators)

Second, multi-identity plans for market segments are not intended to replace existing connections, but to unlock new connections between people and increase the total number of connections. Specifically, the penetration rate of mobile connections in China increased from 113% at the end of 2019 – the early stage of commercial 5G – to 123% at the end of 2023, and will likely continue to increase (source: GSMA).

Third, new market segments continue to emerge. For example, electric vehicle owners with high spending power, can be further profiled so that operators can monetize digital services for these users (source: CTR-Xinghan).

Trend 3: New applications are creating new opportunities

Industry players are no longer obsessed with 5G killer applications, and are instead looking for suitable development paths as they go. They are seeking to either develop stronger capabilities internally or form partnerships externally. According to a report by Omdia, by 2024 Q1, 41% of 5G operators worldwide had 5G applications (e.g., XR, cloud gaming, and 4K content) bundled with their service plans (Figure 6). According to GSMA data, 5G users consume significantly more digital content than 4G users, with 18%, 19%, and 15% more weekly active users of video, music, and gaming services, respectively (Figure 14). This means that in the 5G era, operators have more reasons to launch bundled digital entertainment services.

Figure 13: Increased percentages of users using digital services per week from 4G to 5G (Source: GSMA Intelligence)

Figure 14: China Mobile's new applications increase ARPU and reduce churn rate (Source: China Mobile's FY 2022 financial report)

Operators can use either a self-operating or partnership approach for applications. A typical example of self-operation is China Mobile leveraging the scale effect from its 1 billion mobile users and CNY1 trillion plus in annual revenue to roll out new 5G applications faster. These applications include both established products with a large user base, such as Migu Video (360 million monthly active users [MAUs]), Migu Game (120 million MAUs), and Migu Music (230 million MAUs), and emerging services like 5G New Calling, cloud phones, and glasses-free 3D. These new applications have formed a commercial chain of innovative applications.

Through external partnerships, operators also deliver applications adapted to market needs (Table 4), such as video and music, live sports, gaming, information security, home security, and healthcare applications.

Table 4: Services provided by operators through external partnerships

In addition, the rise of generative AI has enabled the development of AI software and hardware, including popular AI wearables like the Humane Ai Pin and Rabbit R1. The need for use anytime and anywhere and the limited local processing capabilities of wearables mean that cloud-based AI is essential. User plans that integrate AI hardware, connectivity, cloud, and AI may emerge in the near future. AI wearable company like Humane can act as a virtual operator that provides subscription service^[4]. A package that contains AI access, high-QoS connectivity, and cloud application resources may be what AI service plans will look like in the future.

The history of mobile phone plans reflects the evolution of wireless network monetization. We now find ourselves in the most challenging era of mobile connectivity, in which revenue per GB continues to decrease while data revenue growth and even mobile data traffic start to slow. This, however, is also the best of times. 5G/5.5G, cloud, and AI are synergizing and amplifying each other to create new windows of opportunity for multi-metric monetization.

As we enter an era of beyond-data monetization with large existing user bases, we need to firmly support operators in continued monetization with network capabilities. We should help them transition from seeking data traffic-based turnover increases to value-based operations by creating more service applications for experience monetization. We should also use customization to address diverse needs from ever-changing user segments. In addition, we need to foster a robust application ecosystem based on 5G, cloud, and AI.

As 5.5G sees its earliest commercial adoption, realizing multi-metric experience monetization with stronger network capabilities is becoming a focus of discussion. Further monetization based on existing resources and capabilities will be essential to operators' continued business success.