I believe that tiered data service bundles (5, 10, 50, 100, 500...) Mega Bytes per month, while simpler to explain and easier to integrate with billing systems, is merely a spiral towards lower and lower revenue per mega byte consumed. Is this a dead-end pricing philosophy that often promotes massive consumption from the least profitable customers. The only thing worse is the All You Can Eat pricing model!
I believe there is a better way. Application-based bundle of services to subscribers, both business and general consumers. A timely SMS may have more value than a mega byte of data. A turbo VPN service may have more value than best effort from an airport. You get the idea.
This simple change in strategy yields numerous benefits.
- Meaningful customer segmentation to accommodate both the short tail and long tail consumers
- Vertical based (retail, healthcare, education, manufacturing, etc.) The apps can be loaded by the mobile operators on the handsets based on the customer profile.
- Legal price discrimination based on relevance and application value
- Accommodates both long-term bundles and ad hoc bundles
- Helps graduate customers towards increased maturity through integration of voice, video, data, mobility, and collaboration applications. For example, regular consumers may get a basic bundle of services (voice, SMS) while advanced users might get advanced bundle of services such as WebEx, VPN, Video Conferencing or Consumer Telepresence, Unified Communications, etc. The premise is higher the maturity of service bundles, greater the stickiness, higher the ARPU, and lower the churn.
- Delivers valuable personalization with customer context (location/presence, profile, security, QoS, as determined by the apps)
And there are more benefits than what I have listed.
Architecting the network to support these apps will call for pervasive deep packet inspection, policy based network services for dynamic user segmentation in real-time, scalability and performance, OSS/BSS integration, to name a few critical capabilities. And a lot of these can become federated services with network APIs that application developers can access.
So, why haven't the (mobile) operators adopted application based bundling and pricing scheme on a broader scale? What network capabilities are critical success factors? How would over the top apps fit into this discussion?
Would love to hear your comments and suggestions!
Regards,
Nagesh
