According to the GSMA, LTE users consume on average 1.5 GB of data per month, which represents almost twice the consumption of non LTE data users, many of whom exceed their data limits .Furthermore, savvy operators have been innovating, with new offers and business models, to better capitalize on the demand, speed and capacity of LTE. All of these mean more revenue opportunities but as mobile pricing strategies evolve unlimited data plans are becoming less prevalent while tiered pricing models, based on different data entitlements, are more commonplace. These pricing models require operators to put in place usage safeguards and notifications for their customers to avoid bill shock besides offering other value added functionalities.
Many LTE operators are leveraging LTE speed to differentiate, by using tiered pricing to create perceptible value based on speed and encourage customers to upgrade to higher packages. Here are some examples showing different approaches to speed tiers: Telia, the world’s first LTE operator, uses speed to enhance the value of post-paid offers and attract more post-paid customers. Telia applies a speed cap of 20 Mbit/s on its 4G pre-paid offers and provides maximum speeds up to 100Mbit/s to its 4G post-paid customers. Orange France uses speed to differentiate with its sub-brand Sosh; Orange France offers maximum LTE speeds up to 150 Mbit/s on its main contracts, whilst Sosh offers speed tiers varying from 14 Mbit/s 3G speeds to 150 Mbit/s ; Swisscom’s Natel Infinity plans offer the always popular unlimited data, using speed as a differentiating value . However, the speed is reduced to 64kbit/s when a specific amount of data is consumed. They stated in their 2013 report: “Figures from recent quarters shows that customers switching to Natel infinity are generating higher revenues (ARPU)”
LTE has brought the opportunity to not only use speed as a differentiator but also to upsell high-speed. Some operators have been leveraging LTE speed to develop different upsell strategies: A1 Telekom Austria is offering high speed add-ons to supplement base tiered packages with lower speeds At 1Telekom Austria was also offering its business customers a data add-on (Eur 8.25) with night time access (22:00-08:00) to unlimited data, at full speed as per their base package. This is an interesting approach to managing speed and network resources whilst offering the always popular “unlimited” to create a new data revenue stream. Another approach adopted by Ooredoo is to offer tiered data packages and reduce the customer speed when they reach their limits before the end of the month. Customers can then purchase various data add-ons “Extra packs” to restore the speed.
According to research firm Juniper, almost 75% of roamers worldwide do not use data services. Most roamers choose to turn off mobile data or substantially reduce usage for fear of bill shock. The EU Parliament has tackled this issue by voting to abolish roaming charges altogether from 15 December 2015.The question therefore for many operators today is how to keep driving revenues from travellers.T-Mobile US have implemented an interesting approach. They offer unlimited data whilst roaming as part of their “Simple Choice Plan” ; however the speed is limited to 128Kbit/s. Whenever customers require higher speed, they can purchase high speed data roaming passes that provide total cost control; they offer 1 day/100MB, 1 week/200MB and 2 weeks/500MB passes. The plans are also subject to fair usage rules and include unlimited SMS while roaming.
This approach is very attractive for customers as they can access data abroad for free even though at low speed; yet the operator can still generate data roaming revenues by upselling high speed roaming passes.Real-time usage notification can prevent bill shock by empowering customers to take control of their data usage. Operators can configure different thresholds (e.g. 50% and 80%) to trigger notifications which can create upsell opportunities for those who have reached their data usage allowance. Bill Shock push notifications are superior to SMS and allow the use of graphically rich formats that better reflect the operators brand and product marketing requirements.
In a recent survey ( Telecoms Intelligence BSS ), 84% of operators revealed that they will invest in solutions for smart upsell offers, triggered by real-time context information, such as network usage, application access, location and more). This will help operators to maximize upsell opportunities and sales conversion rates as the offers are more relevant and timely.For example, a subscriber on a low speed data package, accessing Netflix, could trigger a high speed add-on offer; Another subscriber trying to access Facebook with no data package could trigger a data pass offer with unlimited access to Facebook. One operator successfully used this approach to stimulate data adoption by upselling real-time data passes (10MB for 1 day) to subscribers who had no data plan when they tried to consume any data. They used data passes to provide total cost control and remove any fear of bill shock .
In today’s multi-device ownership market, allowing multiple users and mobile devices to share a common pool of data is proving a win-win for operators and customers . With shared data, operators are leveraging LTE capacity to extend their user base, accelerate data usage and spend. It is currently one of the most popular plans among LTE operators worldwide. Operators who have implemented shared data plans include AT&T, Verizon, T-Mobile US, EE, Orange Slovakia, Telstra, Telia and more. Shared data is proving to be a real success story for mobile operators. As an example, AT&T’s mobile share accounts tripled year on year to reach 11.3 million accounts and represent 45% of the post-paid subscriber base, with an average of 3 devices per account. AT&T also reported a high 46% take-up rate of their larger data plans with over 10GB of data; this represents a 70% growth from the previous quarter.
AT&T has further extended the concept of shared data to cars with Audi: “Audi’s AT&T-powered in-car LTE service starts at $99 for 6 months, 5 GB”. “Additionally, starting this summer Audi will become the first car maker to offer an AT&T Mobile Share shared data plan option to AT&T customers who would like to add their vehicle to their existing Mobile Share plan”.
Content is increasingly being used by mobile operators to augment the value of their offerings, attract customers and stimulate data usage. LTE reinforces this trend enabling operators to offer high value, even high definition mobile content and enhance the customer experience. More operators are partnering with OTT and content providers to package various types of high value content on LTE. These include music streaming with Spotify and Deezer, TV, films, social media such as Facebook and gaming.
Imposing dynamic video management solutions can reduce the overall video traffic by 40-50% thereby significantly reducing congestion issues. For example, Vodafone UK launched LTE with Spotify premium or Sky Sports included in its Red 4G plans. They are also partnering with Netflix to enable customers to enjoy TV programmes and films on the go for 6 months, as part of their plans “as of July 2014, anyone signing up or upgrading to a Vodafone Red 4G plan can opt for Netflix as their entertainment pack of choice”.
T-Mobile Netherlands sells the Deezer music streaming service to its customers, enabling them to pay directly via their mobile accounts, which is of benefit to subscribers as it’s simpler; it also enables Deezer to benefit from a new sales channel and reach the operator’s subscriber base indirectly. Offering high value content has proven to significantly reduce churn. Orange France for instance has indicated that “customers with an active Deezer connection are twice less likely to terminate their Origami offer”.
Application service passes offer a data entitlement to use a specified application or group of applications for a defined time period. Application service passes provide total cost control and simplicity, which removes any fear of bill shock. This, combined with the popularity of some applications and social media, enables operators to stimulate data adoption and usage. A number of operators have launched application service passes. For example, Axis Indonesia offers daily, weekly and monthly Viber only passes. Movistar Mexico also offers 30, 7 and 3 days data passes with unlimited access to a bundle of popular apps such as Facebook, Twitter, WhatsApps and e-mails, in addition to some data allowance. However the speed is reduced to 64Kbps after 1GB of unlimited app consumption.
By providing real-time visibility and control to customers, operators can stimulate trust, customer satisfaction and subsequent loyalty. This means real time notifications for all customers whether pre-paid or post-paid and self-care dashboards on the device . Real-time notifications also represent an opportunity for operators to upsell, as LTE subscribers regularly exceed their data limits. EE for example sends notifications at 80% and 100% of data usage; the notification includes a link for customers to buy a one-off data pass. Customers must then either buy a data pass or their data access is blocked until the next bill.
Another operator revealed that they achieved, on average, over 20% of sales conversion simply through up-selling data with threshold alerts. Operators can further give customers the flexibility to “buy now” on the device and have their service delivered immediately anywhere; this approach is viewed by 74% of operators as the most successful strategy to build loyalty and increase ARPU; this can also generate reduction in customer service and sales costs.
In a high speed data market, real time customer experience management would only be possible by a robust BSS.The BSS platforms need to be more of a “component” based architecture that allows for interchangeability, is robust, and scalable. A component based architecture creates flexibility for changing out solutions to keep pace with technology advancements and competitive pressures.Today’s data use cases such as data service passes; application service passes and shared data plans are difficult and costly to implement on traditional, inflexible IN platforms.
New dynamic pricing models are also emerging where users can purchase additional entitlements and have them charged and provisioned in real-time. Shared Data is a use case of policy and charging control (PCC) that can be deployed in either policy or charging environments. Policy Manager ( PCRF ) solutions can be used to control bandwidth and consumption to minimize congestion in the face of explosive video consumption as well as allowing a flexible and contextual billing regime.
Sadiq Malik ( Telco Strategist )