Mobile telcos: Get creative with broadband prices

Networking vendor Ericsson has urged Australian telcos to be more creative with mobile broadband prices, despite most service providers lacking the systems to support such flexibility.

In a briefing last week, the networking vendor said carriers had to look to "smart pricing" to arrest a widening gap between traffic growth and average revenue per user (ARPU).

The vendor suggested a raft of new pricing models - some in use by carriers overseas - that had been shopped to Telstra and other local carriers.

These included allowing consumers that were throttled to buy a "day pass" to restore their service to peak speeds temporarily or to reset their billing cycle online.

Ericsson showed internal research that suggested mobile broadband customers would pay more for certain service attributes that required only an "adjustment" or "tweak" of the carrier's network to enable.

That extra $2 or $3 per user per month could make a big difference, according to Ericsson Australia's strategic marketing manager - and former telco analyst - Warren Chaisatien.

With few exceptions, most mobile broadband plans in Australia were volume and time-based, he said. That is; priced via a set quota with a monthly expiry.

Chaisatien called on mobile telcos to be more imaginative and creative in the ways they billed consumers for their user of mobile broadband services.

"It's about finding innovative ways to squeeze two or three bucks out of a customer without making modifications to the network," he said.

Chaisatien said the airline industry had proven particularly adept at enabling users to customise their flying experience and - in cases such as seat selection on an exit row - getting users to fork over a few extra dollars for the trouble.

"The person sitting next to you might pay a totally different price to you," he said. "But everyone gets what they want and people pay for exactly what they want."

Ericsson acknowledged it faced challenges in selling the ideas to its carrier customers.

"The problem is telco billing systems don't allow for any flexibility," Ericsson telecom management general manager Jeff Kernahan.

"If you want to do something it's a six or nine month turnaround."

Kernahan said there were no carriers that had a billing system that could turn on Ericsson's flexible price ideas from today.

However, mobile virtual network operators (MVNOs) could prove a good target market since they were less likely to be encumbered by legacy billing systems and were small and nimble enough to move quicker on innovative price offers.

Telcos that Ericsson had met with - including Telstra - had also expressed reservations on how they would explain flexible billing models to consumers without confusing them as to how they were being charged.

Ideas

Day pass - once a subscriber has used their quota and been throttled, they could be offered the purchase of a ‘day pass' to move from the throttled speed back up to the regular peak speed for one day.

Off-peak data - Heavy users that had been throttled could pay "a few bucks more" each month to be de-throttled at times when the network load was low. ("You'd be taking a gamble that you'll be able to get those spikes," Chaisatien said - but it might be worth the risk for periods of extra quota.)

Time of day/week - For example, unlimited access, but only on weekends.

Stepped charging - Takes advantage of scale of the network. The more data served during a session, the less a subscriber pays.

Bursting - A user receives an SMS when they are just about to run out of quota asking if they want to pay for a bit more time at full-speed to get done what they need.

Would you pay a few dollars extra a month if your wireless internet service provider was more flexible with price/usage?