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The emergence of data-only SIM cards: Are voice plans on the decline?

Prepaid data-only SIM cards offer global data connectivity at low prices, undercutting the traditional business model of big telecommunication companies. But consumers win, in the end.

SIM Card

Smartphones, connected wearable devices, and smart gadgets are on the rise. We have seen how Google is making an increased push into wearables, with Android Wear. And while connected devices are not exactly a new technology, smart gadgets are only now starting to see an increased interest, with the so-called internet-of-things.

With these changes in mind, it’s also not surprising how cellular communication has quickly evolved. It started out as simple mobile-calling when cellular phones first gained popularity, which then gave way to text messaging. Now, data-based communication — including email, IP-based mobile messengers, and even video-calling — are dominating the industry. For telecommunication companies, this will amount to a loss of $479 billion until 2020, says analytics firm Ovum.

In fact, data use revenue in the US has surpassed voice, at least in the past 12 months. In the previous four quarters, data revenue reached $90 billion, and this actually breached a 50 percent share among US telcos. This means users are spending more time — and money — connecting through social networking, social messaging apps and other so-called over-the-top (OTT) services. With Facebook’s recent $19 billion acquisition of chat app WhatsApp, the trend is ever-clearer: voice telephony is likely to take a backseat to data-based communications.

We've gone a long way since the old days, haven't we, Mr. Cooper?
We’ve gone a long way since the old days, haven’t we, Mr. Cooper?

Telcos are catching up to the trend. T-Mobile and AT&T, for example, offer data-only plans. While these are mostly meant for mobile WiFi/Mifi routers, these can easily be repurposed for use on smartphones and tablets. However, costs may still be prohibitive, with fixed allocations and overage charges.

Interestingly enough, there are service providers that are rising to address this emerging trend. For instance, some MVNOs and prepaid providers are focusing on data-only or data-first plans. For instance, UK-based Mobi-Data promises data connectivity across 40 countries for a bucket pricing. Data-only plans are offered at a competitive rates, such as the $22 a month 20GB plan (which comes out at about 90 cents per gig).

Using an Android device, one can even convert a purely data-oriented plan for calls and SMS. For one, there are chat apps that are increasingly replacing SMS as the preferred means of texting, such as WhatsApp and Telegram. VoIP apps like Skype and Viber can easily substitute for calls. But since many of these require you to have a mobile number in the first place, then Google Voice is your friend. With SIP calling and Google Voice SMS, you can set-up Android to use a data-only plan for voice calls and SMS (more on this in a future post).

Telcos will need to react to a changing telephony and connectivity landscape. Big companies like Facebook and Google are now starting to consider blanketing the entire globe with airborne access points — drones for Facebook and balloons for Google — that should provide last-mile connectivity even to remote areas, while offering fast Internet access to denser metropolitan areas.

For end-users, this could mean different things, however. Data-oriented plans will be a boon for millennials and users who are more attuned to IP-based communication. However, users who are more used to legacy devices that can only do basic calls and texts might be left out. One thing is for sure: with data-based plans, we can expect richer and more interesting ways to connect, communicate and collaborate.

And if you’re still in doubt as to the emergence of data, do a quick check of your own mobile habits. Do you spend more time talking and texting via traditional voice and SMS, or are you using email, VoIP and chat more and more?