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Ben Fox
Ben Fox is a Managing Director at TechCaliber Consulting (TC2) based in London, UK. Ben specializes in leading complex global...
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Ben Fox | January 22, 2013 |

 
   

Keeping Ahead of the Wireless Pricing Curve

Keeping Ahead of the Wireless Pricing Curve Staying at the forefront of wireless pricing trends requires revisiting contracts and pricing frequently, and keeping contracts as short and flexible as possible.

A growing trend in the consumer world is plans designed to support multiple devices for an individual or family, which provide unlimited voice and messaging usage across all devices and a data allowance that is shared across all of the individual's or family's devices, e.g., see AT&T's Mobile Share plans and Verizon Wireless' Share Everything Plans. Verizon Wireless is also launching similar plans for business users.

At the time of this writing, the details of these new Verizon Wireless business plans (particularly those targeted for enterprises rather than small businesses) have yet to be released, so the degree to which they differ from the data sharing plans that carriers are already offering is unclear. Traditionally, wireless plans have been linked to devices (notwithstanding pooling of voice and/or data usage; you buy individual service plans for each of your devices, with individual 12- or 24-month minimum service terms). So transitioning to a model that is more focused on users would be a big change. But it is also a change that has strong parallels with Unified Communications, where licensing and pricing models are already aligning with users, rather than devices, regardless of how many devices a user has. This will be fascinating to watch in 2013.

Will Equipment Subsidies change?
One longstanding "feature" of wireless services that presents a major challenge to de-coupling rate plans from devices are the large equipment subsidies that service providers give to offset the high cost of wireless devices, which lead the providers to require individual-line term commitments and early termination fees. The increased popularity of expensive smartphones has taken this aspect of wireless pricing to new extremes, despite the carriers' claim that they would prefer to do away with equipment subsidies.

T-Mobile is currently making a unique move in the consumer market by offering plans that do not provide equipment subsidies or require minimum contract periods. The other suppliers are watching to see how it turns out, and we expect changes in this area to be evolutionary, not revolutionary.

There is already one area, however, where suppliers are not offering equipment subsidies--tablets, particularly iPads. Although tablets that have built-in cellular data functionality cost more than WiFi-only models, users do not appear to expect tablet devices to be subsidized, despite the subsidized pricing for MiFi equipment, USB modems and of course smartphones. Yet in a classic case of a telecommunications carrier wanting to "have its cake and eat it too," individual-line terms and early termination fees still often apply to tablet plans.

Voice and Messaging are now subservient to Data
One of the interesting attributes of the AT&T Mobile Share plans and Verizon Wireless Share Everything Plans referred to above is that they all provide unlimited voice and messaging allowances. The price only varies with how much data you need, and across how many devices.

This reflects the growing dominance of data in wireless pricing and in what is important to carriers: The days when carriers were concerned that VoIP applications like Skype would cannibalize their voice revenues seem long gone. Indeed, Unified Communications solutions such as Microsoft Lync are making VoIP via cellular data part of an enterprise's core IT strategy, driving data and smartphone usage up and cellular voice minutes down.

While voice minutes are not yet anywhere close to being thrown in for free, messaging usage (SMS and MMS) is rapidly trending in that direction in competitive procurements, with customers extracting significant messaging allowances at no additional cost. This also helps to tackle a major rate plan optimization challenge. Whereas most sophisticated buyers of wireless services have become adept at optimizing voice rate plans (i.e., making sure that individual users are placed on the most cost effective voice plan for their particular usage profile), we routinely find that messaging usage and plans are far less optimized, and significant messaging overage costs are being incurred. However, when an enterprise can negotiate a significant message allowance for all of its users, messaging optimization becomes a non-issue for all but the most text-addicted.

One pricing concept that we do not expect to see is the sharing of messaging allowances across multiple pools of users--as the price point for messaging continues to erode, pooling messaging allowances becomes more trouble than it's worth.

The impact of BYOD





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