Pricing Strategies for Mobile Broadband

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Telecom, Media & Entertainment

the way we see it

The Price is Right
Pricing Strategies for Mobile Broadband Services Telecom & Media Insights

Innovative

pricing model

Contents
1 Abstract 3

2 Current Scenario and Need for New Pricing Strategies

4

3 Components of Mobile Broadband Pricing 3.1 Pricing Structures 3.2 Pricing Metrics 3.3 Payment Modes

7 8 9 9

4 Assessing the Pre-requisites for New Pricing Models 4.1 Operational Pre-requisites 4.2 Market Pre-requisites

11 12 12

5 Pricing Process to Maximize Value 5.1 Choosing the right pricing strategy 5.2 Customer segmentation for personalized pricing 5.3 Designing the pricing model 5.4 Launching new pricing plans 5.5 Conclusion

14 14 14 15 15 15

© 2012 Capgemini. All Rights Reserved. Rightshore ® is a trademark belonging to Capgemini. No part of this document may be modified, deleted or expanded by any process or means without prior written permission from Capgemini.

Telecom, Media & Entertainment

the way we see it

1 Abstract
Since 2006, most developed countries have seen rapid growth in the adoption of mobile broadband. In addition, the proliferation of new mobile devices such as smartphones and tablets, along with the consumption of high-bandwidth services such as content streaming, VoIP and mobile cloud services has led to a drastic increase in data traffic. However, data revenues have not kept pace with this growth in traffic and the widening gap is putting pressure on the sustainability of a mobile operator’s business model. We believe that the pricing of mobile broadband is a critical lever for operators to effectively monetize this growing data consumption. Telcos should introduce innovative pricing models that are tailored for specific consumer segments and designed based on consumer-context information such as the device used, location, time-of-use and service being consumed rather than only the volume of consumption. Designing these innovative pricing models requires a clear understanding of the components of a mobile broadband pricing model and operational as well as market pre-requisites that allow the rapid roll-out of these new pricing models. Consequently, telcos should constitute a pricing process that includes identifying high-value customer segments, designing tailored pricing models, and then launching these new plans using traditional and digital channels.

The Price is Right

3

2 Current Scenario and Need for New Pricing Strategies
The mobile broadband market has been growing rapidly since 2006 as more consumers adopt the ‘always connected’ lifestyle. In developed countries, Internet connections have reached high levels of penetration, with average household penetration at 65% in 2010; twice that of the global average of 29%.1 Interestingly, mobile broadband has been instrumental in increasing the penetration levels due to the degree of mobility offered over fixed broadband. By the end of 2010, there were 51.1 mobile broadband connections as compared to 24.6 fixed broadband connections for every 100 inhabitants in developed countries.2 This demand for high-speed connectivity ‘on the move’ is expected to increase further with the growing adoption of mobile computing devices such as smartphones and tablets. In addition, consumers are being offered faster mobile broadband connections and innovative services that are fuelling demand for mobile broadband (see Figure 1). Thus, for telcos this growth in data services is an opportunity to make up for stagnant voice revenues. However, operators have yet to develop a successful model to effectively harness this mobile broadband growth engine.

Figure 1: Key Drivers for Mobile Broadband Traffic Growth

Mobile Internet Device Adoption

 Smartphones and Tablets have crossed an in ection point, with numbers overtaking Desktop and Notebook PCs  Mobile Internet Devices with higher processing power and access speeds have higher data consumption ...
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