Some operators like 3 UK intend to launch LTE at no extra cost to customers, whereas others are charging a premium for LTE speeds. In any case, most operators are leveraging LTE speed to promote and add value to their services.
Tiered pricing for instance has been renewed; it enables operators to capture more revenue from customers ready to pay for premium services and still generate revenue from (and retain) those customers with lower requirements. Overall it creates a win-win situation where the right resources are allocated to the right need at the right price.
Tiered pricing was used on 3G as a smart way to manage capacity and package value by creating differentiated propositions, usually based on varying data volumes. With LTE, tiered pricing is evolving from volume-based tiers to speed-based tiers with data packages based on varying speed entitlements, but often a combination of both.
More and more operators are using this approach to package speed as the main promoted value of LTE. It enables them to create differentiated packages where speed is used to create perceptible value – and encourage customers to upgrade to higher tiers and 3G customers to switch to LTE for a premium. A recent survey by Openet showed that almost 90% of operators are offering or wish to offer speed tiers but not all currently have the capability to do so.
Implementing speed-base packages require policy control and different LTE operators have developed interesting approaches. An example includes unlimited data offerings with differentiated speeds. Swisscom and 3 Austria for instance use this approach, offering unlimited data packages with speed tiers; however the speed is throttled when a certain amount of data is consumed. There are more examples of how operators are innovating in this area, packaging LTE speeds to differentiate and drive revenue.