By Chris Hoover

Mobile operators have been anticipating (and investing in, and standardizing upon) mobile data services for more than a decade. A huge hype cycle at the end of the 90’s about the “Internet in your pocket,” (and associated ARPU) ultimately fell flat. Devices available at that time offered a tiny text-based interface and staggeringly slow connectivity to precious little meaningful content. Operators had made massive infrastructure investments supporting mobile data services that nobody used. What was widely touted as a revolution on par with the Internet itself would have to wait.

To encourage subscribers to fill their empty bandwidth, operators offered inexpensive, all you can eat, flat rate pricing. Over time, infrastructure evolved to support improved data rates and hope remained that someday, data usage and associated revenue would increase. But the devices themselves remained closed to developers with an interface optimized for voice (or, as with the BlackBerry, for specific services such as e-mail). The general Internet experience was still, on the whole, suboptimal.

Then, with the introduction of smartphones, everything changed. The operators selling these sophisticated devices saw subscriber data usage soar almost overnight. This, combined with the gradual decline of traditional voice services, is finally fulfilling decade-old expectations. But the mass adoption of mobile data is creating challenges and opportunities for operators in almost equal measure.

With appropriate pricing models, data revenue could more than compensate for the decline of voice. But the legacy of flat-rate pricing meant that even dramatically increased usage had little direct effect on revenue. The graphic representing this, with a volume curve dramatically rising above a flat revenue line, has become de rigueur for any industry presentation as vendors tout solutions.