Visit the website of any LTE operator and the message is clear. It’s all about speed. Some operators are now pricing speed tiers, and Telia in Sweden goes as far as offering a ‘speed promise’. They will guarantee a minimum of 10Mb/s for customers in an area of LTE coverage.
At present, most operators are providing LTE as a post-paid service. They are missing a significant market opportunity to make LTE available to as many customers as possible. With LTE, customers need the optimal experience – so operators need dynamic pricing and charging, which can involve real-time context aware offers (e.g. network speed upgrade, location-based offers) and controls (e.g. usage caps and notification, spend controls, etc.).
To some customers, data is new and talk of megabytes and gigabytes is confusing, so operators may need to consider application-based pricing. Some operators are bundling “free” services with basic offerings. For example, as part of its lowest cost LTE offer, U.S. operator MetroPCS offers Web browsing and unlimited YouTube. If customers want additional content and the ability to download content from other sites then they need to go to a more expensive plan. The point here is that stimulating usage by packaging a well-known and widely-used content service reduces risk for the customer as they know how much they’re paying and what they’re going to get. In other countries, we’re seeing operators providing bundles of applications and selling them at different price points to attract different segments of customers.
The changes enabled by LTE, such as faster speeds and end-to-end quality of service measurement, will lead to the use of a wider range of services with an increased and more diverse use of mobile data and content. This can lead to micro-segmentation and personalization, which will in turn help accelerate more flexible pricing and charging options that benefit both customers and carriers. These could include family and group usage plans, multi-device plans and application plans. By including options such as these into LTE pricing plans, operators can increase the value that LTE delivers to its customers. In addition, we’ll see more subsidized usage (from content providers and advertisers), more dynamic pricing (real-time context sensitive offers), and smarter tiers (QoS-specific levels). LTE enables much more dynamic usage of a wider range of products and services, so operators need to start providing built-in flexibility on their monetization solutions to maximize the real return on investment of LTE.
For more information on strategic issues on LTE check out Openet’s LTE Knowledge Management Centre www.openet.com/lte