Effective data pricing is not about simply rolling out new pricing plans – it requires a re-think of strategies: implementation of new capabilities like policy control & traffic management; innovations in self-care, loyalty programs, and cross-marketing; and integration of all these dimensions into real-time charging, notification & payment solutions.
The discussion on the ideal model to monetize the explosion of data is live again! The classic one-size-fits-all approach does not make sense anymore.
Last year saw most of the major operators eliminating unlimited data plans to move to tiered pricing. There is very little support for the operators from the community as everyone sees it as an inhibitor to the connected world. Questions afloat on whether it will impede the growth of video-centric applications (still in their infancy) – be it the multi-player gaming or the video calling, media streaming, or the many anticipated new applications. But it is being recognized that growth in data traffic is impacted by multiple drivers – as was seen in India over the last year after the introduction of 3G services, where data growth was impeded due to high tariff’s, inadequate coverage for 3G across the regions and lack of seamless interoperability of many services (e.g., Video conference) across operators. It is clear that monetization of higher bandwidth networks cannot be taken as given – a more holistic approach is needed to facilitate the adoption of data services and thereafter manage the explosion of data.
It is a reality that the carriers need to gain control of growing bandwidth consumption and to make consumers pay for what they use while provisioning for an adequate level of quality of service. While the initial efforts started with ways to curtail data-hogging activities, it is slowly been recognized that there may be better alternatives to address the fundamental problem by re-defining the delivery of their services, managing the way bandwidth is utilized between voice and data services, as well as within multiple data sessions, and introducing new revenue streams. This also serves to enable the telecom providers to differentiate their role in the value-chain and demand a share in the revenue thru premium services.
This requires a re-think of the existing architecture to target fair play, offer flexibility through tiered services facilitate monetization through dynamic policy control & upgrade options, recognize customer loyalty, and integrate partner/sponsors into service models.
Architecture: Manage Inter-linkages
Some of the dimensions involved:
- Implement a data architecture which is able to distinguish & differentiate various types of data services in a granular form, so that differentiated policies can be implemented based on service types, usage, and subscription profiles.
- Implement policy control solutions in the networks to exploit the variation in data usage and apportion the usage of the network to maximize the revenue. It has been seen that the data usage varies widely depending on the end-device, end-user, and other parameters – half of a typical operator’s data traffic is driven by approx 5% of the subscribers only, top 20% of subscribers in usage avail 80% of available capacity. The available capacity during off-peak hours can be monetized by deploying non-user-based services (e.g., utility metering, telematics, M2M, etc).
- Extend Policy Control to create monetization opportunities, i.e. moving beyond denial or restriction of service to introducing real-time notifications & engagement with the user to present options to upgrade to the desired service levels. These could be offered on an additional payment or linked with the operator’s other loyalty & payment modules.
- The key is to provide a seamless experience to the user that integrates policy control with real-time charging, self-care, payment & notification systems.
- Develop network intelligence by consolidating data from multiple sources – monitoring usage patterns, behavior and service experience, data collection from network nodes, integration with operational & service assurance, CRM, and care systems for analytics in real-time to develop profiles and characteristics that can drive usage-based pricing strategies aligned with user behavior.
- Implement an intelligent “offload mechanism” to selectively detour certain types of data traffic (e.g., bandwidth-hogging video traffic, etc) to alternate bypass routes at the network edge, to ensure consistent quality of service.
- Proper dimensioning of networks (access and core) to support the heavy-tailed nature of data traffic is required
- Enhance loyalty packages (discounts, loyalty rewards, bonus points, promotions, etc) based on collected intelligence to define targeted segment promotions and innovate pricing capsules. Integrate into the payment systems to interlink with service upgrades.
- Integrate new channels for notification, communication, and self-care.
- Introduce new pricing Models from bundles, service premiums, partner/B2B models, etc. Other options such as dynamic pricing could also be added.
Next week in Part Two we will look at the opportunities created by the new architecture to introduce new services, products & offers for the changing connected society.