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How Can Mobile Operators Avoid the Data-price plan wars?

Michael Tessler, CEO of Broadsoft

2013 has been an important year for mobile network operators (MNOs), especially in the UK, with all four major UK operators (Vodafone, EE, O2 and Three) making LTE available to its customers. This trend has been consistent across the globe with the Global Mobile Supplier Association (GSA) forecasting that there will be 260 LTE networks in commercial service by the end of this year. As LTE subscriptions increase and users look to take advantage of increased mobile data speeds, MNOs have foreseen data pricing as an important route to monetising investments made in LTE deployment. Operators have entered into a competitive price war over data plans. Michael Tessler, CEO, BroadSoft discusses. 

Focused on succeeding in a new data heavy landscape, those MNOs now offering LTE seem to be tweaking their competitive messaging to include louder attention to pricing, progressive equipment swap-outs and less restrictive contract options. To combat competitive pricing, a select number of operators are beginning to opt for all-you-can-eat data packages, thus minimising the confusion and hassle for consumers while at the same guaranteeing fixed revenue streams.

However, all-you-can-eat pricing packages may not be enough to break away from the pack and appeal to meet the needs of transformed subscribers, let alone drive significant, rather than incremental, average revenue per user (ARPU). Successful competition in the new LTE environment will mean meeting new consumer and enterprise high speed/high bit rate data demands, especially as the converged IP and Wi-Fi centric landscapes challenges traditional mobile revenue streams.

Savvy MNOs seeking to accelerate their return on LTE investments, while still remaining competitive and profitable, will need to focus on increased service offerings versus limiting themselves to data tiers that will continue to commoditise. Rather than compete on data pricing tiers, the wireless industry may need to look elsewhere, such as to value-added enterprise and consumer services. These services, which include support for Bring Your Own Devices (BYOD), are most efficiently delivered as mobile Unified Communications (UC) services.

While consumer frustration and global demand for unlimited data plans makes a statement toward the monetisation capabilities of LTE data, many in the industry believe competing over price or any permutation of data packages won’t truly differentiate one 4G network from another. Better monetisation of LTE may result from identifying the services and applications that enterprises and consumers are demanding and willing to pay for as a premium option.

In a 2013 Wireless Operator Strategies (WOS) service report, Monetising 4G LTE: Evolution of Pricing & Go-to-Market Strategies, Strategy Analytics contends that identifying such premium options is necessary for revenue growth. Phil Kendall, the Director of Wireless Operator Strategies for Strategy Analytics describes the need to adjust strategy in the new LTE landscape citing LG U+ in South Korea as evidence that LTE can be an effective tool for a challenger to gain market share and increase ARPU even in a competitive LTE environment.

Beyond consumers, the enterprise market is being drawn to LTE—especially to the promise of Voice over LTE (LTE) for productivity and cost advantages. By evolving to cloud-based mobile LTE solutions, for example, enterprises can more easily meet BYOD challenges through the provision of a single communications service subscription for their employees. Due to VoLTE’s ability to easily deliver Unified Communications to the mobile workforce, industry experts predict UC as the initial and primary driver for enterprises to adopt 4G. Whether targeting consumer, enterprise or both markets, it is becoming clear that the path to monetising LTE is to differentiate a brand by delivering a suite of UC services and applications to market now.

The greatest opportunity for mobile operators to help enterprises lies in enabling them to adopt and migrate their UC services into the cloud and mobile environment, while creating single communications service subscriptions that address IT silos.

The key for faster monetisation of the investments made in LTE is not simply a matter of increasing average revenue per user (ARPU) with competitive marketing around data tiers, equipment or open contracts. Instead, for operators to recoup their original LTE investments and meet the demand for a seamless, unified mobile experience, MNO’s should seize the look to VoLTE and unified communications to maximise the enterprise LTE opportunity.

 

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