Is tiered pricing appropriate for mobile broadband?

Right now I'm concentrating on the question of 4G pricing in Latin America. Should it be flat, or will providers need to find ways to offer tiered, pay-for-use models? I have some DCF models from this summer ROI for providers WiMAX providers. I hope to do some tweaking of those models and see what happens with tiered pricing. The problem with that is (as always) these models will only be as good as the assumptions and right now, who knows how accurate those assumptions will be.

In the meantime, I think it is informative to think about whether tiered pricing could even be used for 4G. The best historical analogy for this issue is the pricing of internet service. So some papers that look at internet pricing:

#1 - Andrew Odlyzko wrote an interesting piece in 2001: His thesis was basically that internet pricing models would follow historical patterns for communication technology - namely that prices would decrease and tiered pricing would slowly give way to simple pricing plans.

Interesting, so how does this relate to my project? I'd say a couple of ways. First, Odlyzko talks about how the simple pricing plans helped improve diffusion. So even if WiMAX needs to use tiered pricing in Latin America to cover infrastructure investment, that pricing may hurt adoption. Second, would wireless, mobile broadband be a just another means to access internet service or is it a fundamentally different product altogether? If it is different, then tiered pricing models will be more feasible.

#2 Jorn Altman wrote about internet pricing in 2001. He noted that because users are not faced with the true marginal cost of excess usage that they tend to over-use internet service. Thus, flat rate plans are inefficient. He also found that users did not like a "ticking clock" of metered plans. Not super groundbreaking, Jorn. I agree that flat rate plans are inefficient, but what to do about it?

After a summer of working with people on all sides of the wireless industry, this is the situation I see: 4G wireless (whether WiMAX or LTE) can bring a lot of value (or utility, or economic benefit) to a lot of people - but it's not cheap. Especially in developing markets, low margins for service providers will make it difficult to justify for the CAPEX for a WiMAX network. Finding an economically efficient way to price WiMAX or LTE service would help make up that CAPEX. Still looking for that solution . . .

I give myself 2 more weeks on this topic, before I need to move away from pricing questions. Luckily, I'm taking classes from one of the foremost authorities on internet service pricing: Dr. Shane Greenstein.