Unlimited tariffs get complex makeover

As featured on TM Forum’s the Insider Blog
 
Keeping in line with the mobile industry’s long history of complicating even the most simple things, we are now seeing a proliferation of complex data plans to replace the very popular flat rate ‘all you can eat (AYCE) plans.’
 
Yes, yes, we all know that those generous plans were a big mistake, but at the time, PI (pre-iPhone), it was the only way we knew to coax customers into using data to compensate for the impending loss of voice revenue.
 
With all the foresight of a blind newt, we tried to emulate our fixed line relatives' broadband internet access plans - pay a fixed amount but use all you like. Fixed line customers grew accustomed to the idea and the only time they changed suppliers was when the speeds became faster or the prices dropped somewhere else.
 
That’s all well and good for the fixed line world but the mobile world soon discovered the constraints of spectrum bandwidth and, despite advances in 3G and 4G technologies, its inability to keep up with the demand. So, what’s the obvious solution – dump the flat rate plans, charge more per megabyte or gigabyte and devise ingenious (translated to complex) tariff plans to lure the stragglers away from the ‘promised land.’
 
Why, you may well ask, would any sensible subscriber want to leave their unlimited data plans for something offering less value or less performance? The secret is all in the marketing, it seems.
 
Take Verizon Wireless in the USA for example. It has introduced shared-data plans that allow users to put additional devices under one umbrella. The Wall Street Journal hailed it as the “biggest overhaul of pricing in years with plans that let customers share data allotments among as many as ten devices under a single account.
 
“The approach could save heavy users money as they attach phones, tablets and laptops to Verizon’s network. But it also does away with the carrier’s cheapest plans for new smartphone customers and pressures subscribers to give up their unlimited data packages when they upgrade to new phones.”
 
The real secret is that the new plans combine previously available ‘unlimited voice and text’ with those new data ceilings – a sort of ‘give with the one hand and take with the other.’ Sacrificing the declining voice and text revenues to cover some of the data costs and then limiting those by allowing sharing of the data pie amongst a number of devices. To the customer, this looks nice and simple, until they exceed their allocated data, that is!
 
Swisscom is experimenting with a new take on its AYCE bundles, with a range of unlimited tariffs that differentiate on data speed rather than consumption.
 
The new plans include unlimited domestic voice calls, text messaging and data access. However, the plans let subscribers select the data rate they receive, with choices ranging from sub-1 Mbps to 100 Mbps, with an associated price differential.
 
Swisscom predicts the new approach will encourage mobile internet usage by making it easier for consumers to understand the service they will receive relative to per-Mb pricing approaches. The marketing blurb claims charging by call duration and data volume is quickly becoming an outdated model (really), as subscribers demand access to a growing range of web services on their mobile. Translated, that means, the more you pay, the faster you get it.
 
Of course, there are simpler and more direct ways to move customers away from AYCE plans – you can either increases the price or put a ceiling on the amount of data that can be consumed as SingTel has done (slashing entry-level data allowances from 12-GB per month to a paltry 2-GB per month), or in the case of Telstra, introduce device specific capped-plans with attractive tariffs but also with high excess usage charges.
 
These are just a few ‘creative’ examples of what can be done to wean AYCE users off their unlimited supply. There is no doubt that marketing departments will come up with many more. What needs to be kept in mind is that removing simplicity will certainly increase customer confusion, increase pressure on call centers and escalate the potential for more ‘bill shock’ headlines.
 
Be prepared, the blind newts may come back to haunt us.

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