Subscribe / Unsubscribe Enewsletters | Login | Register

Pencil Banner

Developing targeted and flexible data plans

Ken Denman | Dec. 10, 2010
There is little risk of a serious backlash in mobile data usage if tiered packages become the norm. The main challenge is showing value in these new plans.

Todays digital world is marked by a seemingly endless demand for data. The proliferation of wirelessly-enabled devices means more and more of this data is hitting mobile networks, forcing operators to find innovative ways to manage and optimise these networks. Network congestion is a big problem that requires multiple approaches. One way is to focus on the traffic itself with optimisation techniques. Mobile operators must also focus on the demand that is driving that traffic. To fight congestion on the demand front, operators are turning to policy control tools. Sadly, few have maximised the value of these tools.

Due to the highly competitive market, operators are moving consumers away from flat-rate data plans. This is a delicate manoeuvre, as operators dont want to alienate the consumer if the business model is drastically altered. The flat-rate unlimited data plan is an unsustainable business model which has dangerously trained consumers to believe that data is cheap. Tiered pricing, courtesy of policy control, is a step in the right direction, but it's not the final answer towards an effective pricing model.

Consumers appetite for mobile data is here to stay, so there is little risk of a serious backlash in mobile data usage if tiered packages become the norm. The main challenge is showing value in these new plans. Too many of these new pay-per-megabyte plans leave mobile subscribers wondering how much it really costs for them to go online. Is it cheaper for me to hail a taxi than to use my phones global positioning system (GPS)? The confusion for consumers to make the best decision that benefits them monetarily could lead to consumers dissatisfaction and thus result in churn.

Value-based pricing

Tiered pricing plans need to be presented to the end-user in a meaningful way that directly relates to the value of their experience. Analysts say the impact of migrating to tiered data price plans is minor compared to the impact of new business models enabled by policy control tools.

Megabytes and gigabytes of data simply do not have meaning to most users. In most cases, the retail price of a good includes its delivery to that retail outlet. Even when delivery is extra like ordering a book from Amazon the extra cost is pegged to the speed of delivery, a clear value proposition.

Todays volume-based mobile data plans enforce a confusing disconnect between the value of the content and the cost of delivering it. Paying for digital content by the byte substitutes any value that content may have to the end-user with the operators cost of delivery two things that really have nothing to do with each other. Value-based pricing plans need to be marketed to the end-user in a meaningful way that directly relates to the value of whats being delivered, not the cost of delivery.

 

1  2  Next Page 

Sign up for MIS Asia eNewsletters.