Just like the timetable, arranging students into groups based on when they were born makes sense from an organisational point of view. But not from a learning one. So, what are the alternatives?
For some subjects, perhaps grouping by understanding / progress would be appropriate. I’ve heard arguments from both Maths and Science teachers against mixed ability teaching in these subjects, so that would be something to consider
If we start handing over control to students, some things might get grouped by interest. We currently run and enrichment programme in Key Stage 4 to get students to try something new for one afternoon a fortnight. The groups are made up of students who wanted to have a go at a particular thing. If these ideas of self-directed learning take off, so might self-selecting groups (regardless of their age)
Or how about mixed age groups? I am hearing of a growing number of schools creating mixed age group forms with often positive results. If project based learning becomes a greater part of what schools do then (within reason) these vertical groupings could play a part in encouraging younger students to learn from older students, and older students to develop a role both teaching and mentoring younger members of the group