Just as O2 released news that it was revising its pricing plans by ceasing to offer unlimited data, Yankee analysts were taking to an underground stage in London to present three views of how the telecom industry could revitalise itself.
The most specific and, as it turned out, timely advice came from Declan Lonergan, with his suggestion that operators start changing the way they approach their pricing for mobile broadband.
This, he said, would help to close the gap between supply and demand for mobile data, and to close the data revenue gap.
So was Lonergan suggesting that operators merely go for the tiered, “no more data for free” approach of O2? Not exactly. Lonergan’s advice was to start with segmentation, and use that to offer personalised pricing plans. At the moment, he said, operators are just about offering “targeted” pricing plans. But the next step is to allow customers to choose and design their own plans.
As well as more personal pricing, operators need to get more dynamic and converged, Lonergan said. Converged pricing plans are not uncommon he said, with telcos bundling mobile, broadband, fixed and other tariffs together.
As an example of dynamic pricing he gave the ability for operators to be able to charge users dependent on network conditions. For example, if the network is experiencing congestion, but a user is insistent they want to continue a data session, then they pay more.
He said that technically operators are able to do this, but the change required is more cultural and “philosophical”.
Yet Camille Mendler, a colleague of Lonergan’s, had earlier given anecdotal evidence that operators’ back office systems are often more than ten years old, leaving them ill-equipped to address the opportunities Lonergan identified.
Mendler countered that it needn’t cost a fortune for operators to catch up, as they could take advantage of financing options out there that limit up front capex (often to very little indeed).
So, we’re seeing operators faced with a problem. As Mendler put it, “We in the comms industry have to think about how to deal with this new world of demand where consumers want the entire menu. AT&T made a choice about how much they are willing to let the consumer dine on.”
Not just AT&T, of course. As we have seen with O2, other operators are bound to follow. The challenge for operators is to make this change look like, or indeed even be, the sort of personalised, dynamic offers that Lonergan outlined. If it can’t do that, then it simply looks like it is taking something away from those greedy consumers.