Global Survey Finds Service Providers Must Move Beyond Flat Rate Pricing to Embrace Innovation

May 21, 2008 - Openet

DUBLIN, Ireland – May 21, 2008 – A newly-published global study of services, business models and marketing evolution describes a significant economic need for service providers to personalize the subscriber service experience.  The research report, “Insight on Service Provider Innovation,” also illustrates service providers’ concerns for both pricing and infrastructure to support subscriber-focused innovation. 

The survey shows that service providers are in the midst of a sea change.  Flat-rate pricing models have been successful in securing new customers.  However, the shift to IP-based networks and services has increased the competition for subscribers across wireline, wireless and cable operators and IT-based competitors to deliver a variety of existing and new dynamic services such as voice, video, gaming and data services such as instant messaging and mobile search. 
This global study, a commissioned work conducted by Yankee Group Research, Inc. on behalf of Openet as of May, 20th 2008, incorporates views from 150 senior marketing managers at service providers, to fight off the plateau of average revenue per user (ARPU). Responses were evenly distributed across North America, Europe and Asia.
The following highlights are excerpted from the survey:
  • 57% of providers agree that flat-rate pricing will stifle innovation and limit growth
  • 79% of providers believe the economic slowdown negatively impacts customer spending, stressing the need to make each and every relationship profitable
  • 84% of global operators agree that high-speed data access is critical for future revenue growth
  • Although marketers believe data growth will hit 30-40% in the next 12-24 months, Yankee estimates 80-100% growth, showing that marketers are aware but not yet accurately forecasting the true needs and demands that will be pushing their businesses
“Under the backdrop of looming economic slowdown and decline in their core services revenue the results of the survey highlights the major steps marketers of service providers are currently undertaking or planning to offset their decline in revenue. One critical factor for marketers is to roll out pipeline of services which are based on customer focused innovations,” said Ari Banerjee, program manager, enabling technologies, Yankee Group.  “The survey points to marketers believing that flat-rate pricing models will eventually prove to be the silent killer for service providers, and hence they are hedging their bets on more nuanced business models based on a heady mixture of 3Ps – policy, promotion and pre-paid.”
Service provider marketers are asking for more flexibility both to quickly roll out services, and to allow subscribers configure services and plans.  The survey found that these requirements are at odds with the traditional infrastructures in place, and are pushing service providers of all types to migrate to next-generation technology that will provide the speed, accuracy and delivery of real-time usage intelligence to help segment and deliver new services profitably and reliably, to ensure customer satisfaction and loyalty. 
“Service providers – be they wireline, wireless or cable – are in a race to meet the shifting customer demands for new IP based services, while pushing traditional infrastructures that weren’t designed with these types of services in mind to the brink.  Service providers know there is no “killer app” for these savvy customers, who are defining where, how and to what extent they want new services, and are left with the choice of run faster or get left behind,” said Michael Manzo, CMO of Openet.  “Networks need to bridge their legacy infrastructures with next-generation technology that will scale to meet the speed and accuracy requirements of successfully and continuously delivering new and exciting IP-based services in this increasingly competitive landscape.”
About Yankee Group
The people of Yankee Group are the global connectivity experts™—the leading source of insight and counsel for builders, operators and users of connectivity solutions. For nearly 40 years, Yankee Group has conducted primary research that charts the pace of technology change and its effect on networks, consumers and enterprises. Headquartered in Boston, Yankee Group has a global presence including operations in North America, Europe, the Middle East, Africa, Latin America and Asia-Pacific.

About Openet
Openet is a leading worldwide provider of event processing and transaction management solutions. The Transactional Intelligence of the company's solutions extracts increased value from diverse service provider networks, enabling rapid introduction of new services and reliable, cost-effective management of existing services. Openet is focused on delivering best-in-class network edge solutions and specialized engagement processes that create business value from network activity. A global company, Openet's implementations include long-running engagements with the world's leading service providers such as British Telecom, Orange, AT&T and Verizon Wireless. For more information, visit


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