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Goodbye all-you-can-eat, hello a la carte

Wed, 08/11/2010 - 11:11pm
Mobile Marketing Association

By John Giere, Senior Vice President, Products and Marketing, Openwave

From smartphones to netbooks to tablets, we are in the midst of a market frenzy, as a new type of device seems to launch every week. The latest breed of mobile devices are lifestyle-built for consuming more and more data. As more people adopt these new devices, the closer we get to the ideal of consumer freedom: anytime, anywhere access to our information, entertainment and community.

But in this new era of mobility, not all parts of the value chain have evolved to accommodate changing consumption habits. Alas, it seems that mobile service providers on several continents have received a healthy dose of negative press for their inability to change with the times and come up with appropriate data plans and roaming tariffs that fit the new devices on their networks. Smart devices need smarter data plans.

We are talking about mobile devices after all. Doesn’t it seem a bit absurd that roaming is so consistently penalised, and therefore discouraged? Do we want the image of being a consumer-unfriendly industry? Do we want a third party (i.e. the government and regulatory bodies of the world) to intervene and impose a solution upon us?

Roaming rip-offs

The media has done a great job documenting "roaming rip-offs" and the options that exist for US, Canadian and European iPad users. Bottom line: it’s expensive, confusing (may require knowledge of a second language or the use of colour-coded SIMcards), and can ultimately lead to surprising data roaming charges, otherwise known as “bill shock”.

While data roaming seems to be the leading cause of bill shock in Europe (where travel between countries is more common), it is neither a uniquely European problem, nor is it unique to data roaming.

The opportunity exists for entrepreneurial operators to move market share in their favour through new data pricing strategies that meet the changing needs of this evolving market. After all, market success always comes down to the age old maxim - put the customer first. I have faith that mobile operators will see the long term benefits of good customer care versus the short-term revenue gains of cryptic contracts.

Now this may sound overly optimistic in light of recent announcements from Verizon Wireless and AT&T to replace unlimited data plans with tiered pricing on their 4G network, and O2’s move to scrap flat-rate data in the UK. But tiered pricing doesn’t preclude good customer service.

We have predicted previously that unlimited data plans will become the most expensive option, while a variety of tiered micro-segment service plans will become the norm. Today, more than 20 operators around the world are testing and implementing new pricing strategies in an effort to support the market need for ever more segmented data traffic plans against the declining voice-based ARPUs. As the transition to more creative pricing plans continues, operators shouldn’t miss the opportunity to grab market share, by positioning these service tiers as offering greater customer choice, instead of as a complex minefield of hidden charges.

Time-based passes

Yes, roaming is expensive for the operator too, but that does not excuse or explain away bill shock.  I love the idea of time-based roaming passes (a day pass or hourly pass) with optional volume caps, or even content-specific roaming subscriptions (e.g. a World Cup package). If you give consumers a clear way to track their own usage with optional threshold notifications, you’ve just created a framework where travelling users will be much more likely to accept data roaming charges, while preventing the inevitable angry customer service call when the bill arrives.

But let’s go a step further. If operators can reduce the aggregate volume of their roaming traffic, they can pass the savings onto their roaming customers. Through content compression, caching and other optimisation techniques, mobile operators could offer more diverse (and cheaper) pricing options, based on quantity and quality.

Thus far, the iPad’s predominant usage model has been pay-as-you-go. Unless this changes, I see a growing segment of mobile users accustomed to pre-paying for access as needed. Operators must address this valuable target audience by making it simple, satisfying and relatively inexpensive to cruise with their device anywhere they go. Isn’t that what mobility is all about?

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