Operators should rethink mobile broadband pricing - Capgemini

bealtine

Operators should rethink mobile broadband pricing – Capgemini
By Anne Morris, Total Telecom, in Barcelona
Thursday 19 February 2009
Consultant says operators should encourage low users and limit heavy consumers.

For once the telecoms industry has found a 3G application that works: mobile broadband take-up has been swift in the last 12 months and has shown that access is important again, said Didier Bonnet, global head of consulting services, telecom media and entertainment at Capgemini.

But like many, Bonnet fears that the industry has rushed too soon to implement pricing levels that are unsustainable, with "phenomenal" price decreases to attract new users.

"I think there will be a rethink on mobile broadband pricing," said Bonnet, who added that he is encouraging Capgemini's operator customers to consider different types of pricing models depending on the user.

He said operators should consider how to encourage low users and restrain higher users, noting that 20% of users typically generate around 80% of the data traffic on networks.

Indeed, as the recession bites harder Bonnet said pricing and bundling analysis will be an increasingly important tool for all mobile services. For example, operators have to understand which users want to move to a lower-priced bundle to be able to prevent them from churning to another provider, while at the same time they can do more within the bundle to create stickiness.

With regards to the wider impact of the recession on the mobile industry, Bonnet said an analysis of consumer spending in previous recessions indicates that although telecoms is not immune to economic downturns it is more resilient than other industries, such as the car industry or luxury goods.

In good times, he said consumer telecoms spending growth is typically higher than GDP per capita, while in bad times spending tracks GDP per capita. "It doesn't collapse," Bonnet said. "And if you track consumption over the last 40 years it has shown steady growth."

But although consumption is constantly going up, the industry has been unable to monetise this as revenue growth has not kept pace. And Bonnet said matching revenue to consumption growth will be even more difficult during times of hardship.

"You have to be realistic about what you can get out of consumers in a recession," he said.

Bonnet said he also believes there will be a new wave of consolidation in the mobile industry: "Life is very hard for smaller operators," he said. "There might be some nice bargains to be had in the second half of the year, by which time the market might be more accepting of acquisitions."

He said there will also be an increased move to network outsourcing and network sharing, although he said he has been surprised at how slow operators have been to adopt such measures.

lucernarian

Interesting article, thanks for that.

The last paragraph reminds me of a point I've made to myself: In places where it is completely uneconomic to have mobile masts, why don't the 4 network operators implement some sort of shared network agreement? (like an evolution of Meteor using O2's coverage in a couple of areas).

watty

Because such a shared mast would still be too expensive.


Basically per Mbyte voice+SMS is 400 to 500 times more expensive than Mobile data for user. For operator, the data per Mbyte may be more expensive (peering and export/import). On voice calls the cost of termination should roughly be cancelled by incoming termination charges.

50 mins is about 10Mbyte of data. Add same amount of incoming calls, total = 20Mbyte. The charge is the same roughly as for a 10Gbyte cap Mobile package.

The current pricing is designed to undercut eircom line rental and is not sustainable.

It's evident that in long term with Mobile favoring low quantity users and sustainable prices it is not a Fixed Broadband alternative, but mobile complement for well heeled business person, apart from the technical issue of speed & capacity which can't be solved by MIMO LTE unless we have masts every 300m

bealtine

watty wrote: »

apart from the technical issue of speed & capacity which can't be solved by MIMO LTE unless we have masts every 300m

And that is obviously going to cost 200 million