Early LTE pricing plans skew to basics: tiers, throttling and little imagination
August 25, 2011 - Openet
Policy vendor Openet explores early billing strategies, finds mostly tier-based pricing based on usage and download volumes and speeds. Could smarter networks yield smarter pricing?
In its earliest stages, LTE pricing by operators around the world has a few things in common, focused mainly tiered plans, based on a combination of usage volume, download volume and download speed, with restrictions and throttling being used in many cases.
That’s the word from policy vendor Openet, in a pair of white papers examining current approaches to LTE pricing. According to Openet’s analysis, initial offerings are typically a trade-off between allowable speed and volume. Customers can choose lower speed for more volume, or more speed for less volume.
All of which seems a little like buying a car; it also seems like giving a 19 year old the keys to a Ferrari but only giving him a quarter of a tank of gas.
Examples of individual operator pricing plans are detailed in one of the papers. For instance, in Sweden, Telia provides a choice of three plans – total, grand and medium. Medium allows a maximum speed of 10 Mb/s, a maximum volume of 10GB and will throttle back to 120 Kb/s if the threshold is reached. This is offered at a 20% premium to 3G. Total provides an impressive 80 Mb/s, 30GB max, the same throttling and a 40% premium to 3G services.
Verizon Wireless provides the greatest flexibility, offering plans for a range of tablets as well as smartphones. It also has a long list of terms and conditions. The maximum speed is between 5-12 Mb/s, but the max volumes allowed are not as generous as Telia – starting at 1GB for a tablet and ending with unlimited for a smartphone (though that is changing as well as Verizon moves toward tiers). Their throttling policy involves overage charges on volume.
CSL in Hong Kong offers ‘the fastest broadband in Asia’, does not differentiate in service description between 3G and 4G and uses its fair usage policy to throttle very heavy bandwidth users. The total volume allowed is unlimited, the speed is a maximum of 21 Mb/s and the premium is 21% on 3G service.
This range of options is already complex enough, if not very sophisticated. The result: it will be difficult for customers to compare like with like.
What telcos offer in the future is unknown, of course, but Openet advocates a pricing philosophy of subscriber optimized charging.
This approach to billing is dictated by the increased richness of the 4G or LTE experience. Subscribers will use a range of services, with different payment mechanisms, they will have multiple devices, real time and context awareness will become vital components of the customer experience and telcos will need to adapt far quicker than they are able to at the moment.
Ultimately, the vision of subscriber optimized charging is made up of three ingredients relating to the customer – pricing must be converged, personalized and dynamic. To achieve this requires offering support for multiple devices, flexible pricing customized to individual needs and context and quality aware services.
For telcos to get to this level of sophistication will require investment and effort – it will require real time charging, a single view of the customer, support for multiple payment options, active policy management, optimized network management and support for cross network bundles.
Underpinning all of this, the telcos will need to address not only their legacy architecture, but also their legacy culture. They must change the way that they address the market, test and launch new services and support the customer.