China Mobile chief warns unlimited data plans not ‘healthy’ for industry development

Unlimited data plans may increase revenue in the short run, but are ultimately unsustainable for the industry, China Mobile chief executive Li Yue said on Wednesday.

Li told reporters after the company’s annual general meeting that unlimited data plans without a cap on how much data can be used may be profitable for operators today, but will ultimately cause losses for the industry in the future.

His comments came after China Telecom and smartphone maker Xiaomi announced an unlimited data package for Xiaomi users earlier this month, much to the delight of Chinese netizens. China Mobile has also pushed out similar data plans, but data speeds are throttled once users use over 12 or 20 gigabytes of data per month depending on their subscription plans.

“We’ve done our own experiments for mobile broadband, a user could use up to 40 gigabytes of data a month if you don’t [cap the amount of data],” Li said. “If data plans are truly unlimited, users may be content with using five or six gigabytes today, but next year they could use 15 or 16 gigabytes, and the year after maybe even 35 gigabytes.”

“At that point, if it’s still the same data plan at the same price, [companies] will require a lot of resources to support this plan. The industry won’t be able to develop in a healthy manner.”