Table of Contents
Summary
1. Mobile operators face complicated decisions about service pricing
- 1.1 Pricing will play a critical part in increasing voice and data revenues
- 1.2 The pricing of mobile services is complicated by a range of factors
2. Service bundles satisfy seven golden rules of pricing for growth
- 2.1 Pricing solutions must satisfy seven golden rules to maximise the
revenue from mobile services
- 2.2 As more mobile services are offered, pricing schemes will need to be
easy for users to understand and for operators to implement
- 2.3 Bundled pricing will be at the heart of future mobile service pricing,
while flat-rate pricing should be applied with care
3. Bundled pricing can grow voice usage and drive take-up of new data services in the short term
- 3.1 Bundled pricing can encourage mobile voice usage, in order to reduce
downward pressure on ARPU
- 3.2 Bundled pricing can help to drive the usage of individual data services
- 3.3 Bundled pricing of multiple services can be highly effective in
encouraging take-up of new data services
- 3.4 Given the proliferation of prepaid users in some markets, operators
must develop bundled pricing solutions for them
- 3.5 Mobile operators must design bundles carefully to avoid suppressing
usage or damaging profitability
4. Bundled pricing can strengthen customer relationships, with major long-term benefits for operators
- 4.1 Bundled pricing can help mobile operators to increase ARPU, reduce
churn and avoid price erosion
- 4.2 Mobile operators can learn about pricing bundled services from good
practice in other industries
- 4.3 Customised service bundles for individual customers could ultimately
bring the greatest benefits
5. Flat-rate pricing of mobile services may be a step too far
- 5.1 Flat-rate pricing could help to increase ARPU for some services and
customer segments, but has disadvantages
- 5.2 Fair-usage policies can avoid the abuse of flat-rate services, but
have limitations
- 5.3 Traffic shaping may be more effective than fair-usage policies for
flat-rate pricing
- 5.4 Mobile operators should confine flat-rate pricing to services that are
well contained and less risky
- 5.5 For mainstream appeal, flat-rate pricing needs to be affordable, but
this increases the risks
- 5.6 In the long term, flat-rate pricing may have an adverse effect on ARPU
Actions
Companies discussed in this report
3 (Italy), 3 (UK), British Sky Broadcasting (UK), KDDI au (Japan), NTT DoCoMo
(Japan), O2 (UK), Orange (France), PlusNet (UK), Proximus (Belgium), SFR
(France), Sprint Nextel (USA), Telefonica Movistar (Spain), TIM (Italy),
T-Mobile (UK), T-Mobile (USA), Virgin Mobile (USA), Vodafone (Germany),
Vodafone (UK)
List of Figures and Tables
- Figure 0.1:A process for using bundles of mobile services to develop
strong customer relationships and maximise ARPU
- Figure 1.1:Voice ARPU for selected Vodafone subsidiaries in Europe and
Japan, June 2004- March 2006
- Figure 1.2:Factors to be considered in the pricing of mobile services
- Figure 3.1:Average monthly voice usage per user for T-Mobile (USA), first
quarter 2003 to first quarter 2006
- Figure 3.2:Proportion of prepaid customers in selected countries
worldwide, March 2006
- Figure 4.1:A process for using service bundles to develop strong customer
relationships and maximise ARPU
- Figure 5.1:Revenue per megabyte resulting from a range of monthly fees and
usage levels
- Figure 5.2:Access, interconnect and content costs of typical mobile
services
- Table 2.1: Examples of pricing methods used for mobile services
- Table 2.2: Attributes of bundled pricing that enable it to satisfy the
seven golden rules of mobile service pricing
- Table 3.1: Bundled voice tariffs for individuals offered by T-Mobile
(USA), June 2006
- Table 3.2: Bundled voice tariffs for families offered by T-Mobile (USA),
June 2006
- Table 3.3: Pricing of O2 (UK) SMS contract 'Bolt On' bundles, June 2006
- Table 3.4: Examples of multimedia service bundles offered by 3 UK, June
2006
- Table 5.1: Peak-time usage restrictions applied to PlusNet's Broadband
Premier Option 1 fixed Internet access service
- Table 5.2: Vodafone (Germany) WebConnect Internet access pricing, June 2006
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