Bringing customers closer: Six degrees of mobile data plan innovation

Jul 31, 2013

We’ve all heard about the dramatic rise of mobile data traffic, spurred on by expanding 3G and LTE networks, smart device use, compelling apps and mobile video consumption. We know that mobile network operators face shrinking voice and messaging revenues and growing competition from over-the-top (OTT) providers. Operators know the pressure is on. Can they transform network investment and data traffic demand into data revenue growth? Where will this growth come from?

What’s wrong with today’s mobile data plans?

Today’s unlimited and tiered mobile data plans commoditize data services. They encourage subscribers to choose mobile operators based on who provides the most data for the lowest price. As subscribers shop for bargains, data pricing inches lower. Even so, subscribers still leave money on the table. With unlimited and tiered plans, they pay the same amount regardless of how much value they get.

Research by Alcatel-Lucent shows that tiered data pricing also drives subscriber discontent. Across France, Japan, the UK and the US, a large majority of those who are unhappy with their mobile data plans name pricing as one of their top 3 sources of dissatisfaction. As shown in Table 1, this dissatisfaction often stems from paying overage charges for exceeding data limits, or from failing to use up monthly data allowances.

Source: Alcatel-Lucent Wireless Nomad Primary Market Research, January 2013

Six degrees of mobile data plan innovation

Mobile operators can do more with mobile data plans. They can evolve beyond basic tiered and unlimited plans and offer greater flexibility and choice. By using and combining different degrees of mobile data plan innovation, operators can shift the focus away from per-megabyte pricing and start winning customers over with data plans that deliver greater personalization and value.

Here are six degrees of mobile data plan innovation that can help operators give and get more value from mobile data:

Service level-based plans: Subscribers pay a monthly or per-use fee to get a higher speed or quality of service (QoS) than the average user. Service level-based plans can also be offered to OTT providers seeking to offer different service levels to their own subscribers.

Shared data plans: Several users or devices share one data plan. Shared plans encourage subscribers to purchase more data and connect more devices and subscribers to the network.

Application-based plans: Subscribers pay a one-time or monthly fee so that they can use an application without consuming their data allowance. Application-based plans help attract new data subscribers and encourage uptake of mobile applications.

3rd party pays: An application provider or other business pays for the data consumed when subscribers use a specific application or service. For example, a video streaming service can pay a mobile operator a negotiated rate so that subscribers can watch videos without worrying about data usage and overages.

Loyalty-based plans: Subscribers are rewarded for spending and reaching loyalty milestones. Loyalty- or reward-based plans increase revenues and allow subscribers to enjoy personalized experiences. They also give operators and retailers new opportunities to form mutually profitable partnerships.

Capacity-based plans: Subscribers are offered incentives to use mobile data at off-peak times or in locations where the network is underutilized. In exchange for discounts or increased QoS, operators can use capacity that would otherwise be spoiled and defer investments in network growth.

Extracting the value from mobile data

It’s important to understand that each of the six degrees of mobile data plan innovation offers a different value to the subscriber. An operator that combines different degrees into different mobile data plans gives subscribers the ability to pick the plans that suit them best. This freedom of choice helps personalize the data plan and capture the value that mobile data provides to specific subscribers. It can also help improve customer satisfaction.

Operators can offer more personalization and generate more revenue by proactively recommending mobile data plans and services. To succeed, these recommendations must address subscribers’ interests and needs, and be easy for subscribers to accept. They must be backed by network capabilities such as network analytics, policy control, offer orchestration and an intuitive self-care interface that can work with online charging and subscriber data systems.

This blog post was initially featured on TMC Net, as part of an eight-part blog series. In this series, Rich Crowe answers these questions by presenting six degrees of mobile data plan innovation that can help operators build closer relationships with customers and grow data revenues.

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