The Internet won the mobile broadband war (but you could still lose)

Mobile operators might as well give in and work with web companies when it comes to delivering services via mobile broadband. That’s the conclusion of the latest report out from Allot Communications, a company that aims to sell software and gear to companies like Verizon and AT&T (s t). Allot’s latest mobile traffic report indicates that the big web players such as Google (s goog), Amazon (s amzn), Facebook and Skype are still racking up gains, while newcomers offering similar services to operators are also on the rise.

For example, voice-over-IP and texting services are up 114 percent from the first half of the year, presaging a future when the line items of texting and voice plans could disappear. Already companies are declining to buy texting plans for their employees, rightly recognizing that they can communicate via text without going through the carrier’s SMS system. It is a phenomenon already cutting into revenues at European carriers, and it will be felt soon here in the U.S.

Meanwhile, VoIP calling services, whether they are via Skype or Viber, are on the rise as well. And while carriers that are transitioning to LTE networks will eventually move their voice calling over to IP calls, it is unclear if the price paid for voice plans will see a subsequent drop. But data plans will only represent almost 40 percent of the average revenue per user (ARPU) by the end of the first quarter this year, according to Chetan Sharma, an industry consultant. This is a problem for two reasons, the first being that if people stop buying voice or texting plans, operators have a large hole to fill in ARPU. Second, the per-gigabyte price of VoIP calls or IM would not fill that hole but would also replace a higher-margin service with a lower-margin one.

So is compromise in the air?

In the wake of these losses in revenue, Allot’s recommendation to carriers is now compromise. A few years ago Allot was selling new types of pricing plans to help carriers cut down on bandwidth-hogging video applications while some carriers were trying to curb usage of new service by changing their terms of service to forbid users from streaming video to their phones. Allot called it. A backlash to the terms of service changes and carrier’s realizing that pricing was a better and more profitable carrot to use has reshaped the industry. It is becoming difficult to find someone with an unlimited mobile broadband plan.

I will take Allot’s recommendation that carriers should work with over-the-top providers pretty seriously. Already Skype, whose business comprises 79 percent of the VoIP traffic that Allot notes is rising, has a deal with Verizon that could represent the new breed of compromise. Unfortunately, details of their arrangement are hard to ferret out, but it seems to benefit Verizon over the consumer.

Also, we still waste a lot of time on YouTube

Aside from predicting the future for mobile operators, Allot’s data shows how much of our present we spend surfing YouTube on mobile networks. Globally, almost one out of every four packets (24 percent) traversing the mobile network was from YouTube, and it also accounts for 62 percent of all streaming traffic.

It appears from the report that the next big worry on the horizon will be HD video streaming traffic. YouTube’s HD-streaming traffic has increased by 300 percent from the first half to the second half of the year. Better and bigger screens are to blame for this boost, according to Allot, but I think faster LTE networks that are rolling out around the country play a role. Faster networks mean we can stream higher-def content, although we may end up paying for it in overage charges later.

And in those faster networks, along with our tendency to guzzle video content, may lie the secret to mobile operators’ success. Customers are already used to paying a set amount for voice, texting and data, but right now more than half of that amount is voice and texting. The challenge for carriers will be in shifting their pricing so customers pay about the same amount per month but “see” more of that going to data and less to voice or texting plans. Perhaps consumers would pay a bit for a VoIP plan that exempts Skype from counting against their data plan or ensures they could make a call.

For carriers, the worst thing that could happen from a pricing perspective is that consumers begin dumping voice and texting plans and acclimatizing to paying them less overall. But if operators cooperate with VoIP, IM and even video-calling services to offer an easier on-ramp to IP communications as well as plans that shift more of the costs paid by a consumer over to data, they may win. Companies like AT&T might be able to keep the same amount of consumer wallet share, co-opt their competition and probably eke out a few quarters of higher margins.