Is data pricing the next battleground for operators?

"These guys are losing 2.5 percent of their customer base every month. They have to change their business," Hmmm... That statement is a little misleading considering T-Mobile is actually growing its customer base. Sure, churn is the number of customers that cancel compared to the customer base BUT a large influx of new customers will keep the overall base growing (unless you're Sprint). So let’s look at T-Mobile's 33 Million customers and their churn rate. 33,000,000 x 2.2% = 726,000 people that decided to deactivate T-Mobile service. Now let’s look at AT&T and Verizon.. we'll use 80 Million as a nice round number. Verizon's Churn is about 1.4% and ATT about 1.1%. 80,000,000 x 1.4% = 1,120,000 and 80,000,000 x =880,000. Wow, more people deactivated with both AT&T and Verizon! It's a shame that when companies grow through mergers the large customer base lowers the churn percentage, but not the actual number of customers leaving. No matter which way you slice it more customers cancel with AT&T and Verizon than T-Mobile. That's pretty amazing considering the marketing budget for "the big two" is probably 6X that of T-Mobile. It's a good thing their false promises keep new people coming it at record rates to offset the defectors. Sprint, on the other hand, has a customer base of approximately 49 Million and a churn rate of about 2.05%. 49,000,000 x 2.05% = 1,004,500. Those churn percentages really hide the actual number of defectors, don’t' they?

"You may not be able to gift-wrap a two-year broadband wireless data subscription, but if the price is right, I'm sure consumers can be enticed to buy"

You certainly can gift-wrap a 3G dongle modem with prepaid time or data, say 10GB valid for 12 months.

These type of products have been available in the UK for more than a year - for example an HSPA modem "preloaded" with 12GB of data allowance for £100 [$170] from 3UK

How is a price cut "innovating"? If you talk to any carrier, you will understand that they are getting killed on the network costs of unlimited data plans.

You are right to state that operators need to "innovate" on their broadband data pricing. But Bard's comments about becoming "more aggressive" feels like a call for a race to the bottom. What's key is for operators to combine pricing with *personalization*. Giving subscribers the ability to personalize their service subscriptions and usage can drive higher ARPUs from deeper market segmentation. More importantly for operators’ revenues, these capabilities will give their marketing organizations the business flexibility to cross-market add-on services, loyalty programs, customized advertising, promotions, bi-directional partnerships with 3rd party content providers, and more.

See more at this blog: https://www.myciscocommunity.com/community/sp/mobility/blog/2009/08/14/mobile-broadband-in-search-of-a-better-bundle

Honestly the carriers should be charged with racketeering in the US. I am sick of traveling overseas and seen everyone but the US getting better data plans for far less price. The US consumer is in fact subsidizing foreign markets for the wireless carriers. People are increasingly fed up in the US with constantly nickling and diming, worsening customer service and ridiculous long contracts. The prepay market with grow, and carriers like MetroPCS will grow. Other will either change, or if I am correct, we will soon see ATT, SPRINT, and Verizon asking for a government bailout

Anonymous, the percentage loss is much more important to look at when determining "defectors" than the amount of customers leaving a company. There is a base churn percentage that happens even if no customers "defect" to another carrier because people die, stop paying for service, leave the country, etc. Lets just say that "natural churn" equals 1 percent of all wireless customers. In, the case of TMobile, we would then subtract that 1 percent of from the 2.5 percent, and factor 1.5 percent against the subscriber base. That leaves us with a more accurate "defector" number. Of course when you do this, TMobile and Sprint actually are losing more actual customers by means of "defecting" than both Verizon and ATT combined. The "natural" churn number is debatable, but it shows how the number of customers leaving is relative to the total number of customers. Therefore, we cannot compare the total customers lost because the simple fact is that TMobile has less subscribers so it is going to have less people dying off, or leaving the country, etc. It does proportionally and, most likley, actually has more customers defecting then Verizon and ATT even with less that half the subscriber base.

Kim,
The US consumer is continuing to by phones and contracts through one of the worst economic downtimes in the last 50 years. Hardly anyone in the US want to pay for a phone, even if it gives no contract with all the same services. The US consumer wants the long contracts and low priced, high end, phones and more specialty services. Until the US consumer changes its ddemand, the big wireless companies are not going to change nor will they be going to the goverment for help. One final Note, US consumers are not subdizing foreign market, we are subsidizing building our rural US markets.

The Elephant in the room is the lack of bandwidth/spectrum the carriers have today and even into their 4G world to address the explosion of the Video delivery sector. These folks can create new Data/Video pricing plans for the customer hoping that they do not read the fine print that effectively will control how much bandwidth they get for the "Unlimited" services offered.
This is a problem today for the Carriers and will continue into their LTE networks 2010-2013. They are going to have to decide how do deal with their VOice Traffic on these new 4G nets as well as basic data services. VoiceIP is a must near term and but will add more pressure on the pure Data plays being planned.
The big carriers will have to keep their existing 3G networks in place for longer then they want in order to be able to deliver the 3 services (Data/Video/VOice).
They are most at risk from Clearwire and WiMAX in the Video/Data segment that was designed for Data/Video delivery. WiMAX along with WiFi will dominate the Metro Area Networks and force the big Carriers to offer Data/Video in the Wide Area and handoff to the WiFi based hotspots in the MAN.

Question: Why is everyone, radio Vendors, avoiding development of Radios for the AWS 1 spectrum that is prevelant in the markets? Seems to me that much can be done with a WiMAX based network using the AWS spectrum. Most owners have 20Mhz plus of the spectrum which is sufficient for a solid Data/Video network.

Jim A.