Thursday, October 25, 2012

Necessity is the Mother of Mobile Pricing

Most people would accept the notion that retail prices for any product, good or service are related somehow to the costs of supplying those products. That does not always mean the actual retail price is directly related to the cost of supplying the product. Grocers commonly choose to price a few items at a loss to get shoppers into stores, on the assumption that they will make money on the other products shoppers buy while in the store. 

One might also observe that profit margins for products that use a shared platform are not always the same. Some products offer higher margins, while others have lower margins. The reason many grocers sell finished meals is that the margin and gross revenue for meals is higher than for the raw ingredients used to make those meals.

Mobile service providers, in fact fixed network providers as well, will face those issues in the decade ahead as the mainstay voice product loses the ability to support the bulk of network and operational costs. 

The problem for the U.K.'s EE and every other mobile operator in a developed market is that voice revenue is static, or dropping, while data isn't contributing enough to fund the network, so something has to give, The Register reports. 

Network sharing and outsourcing support can cut costs a bit, but ultimately customers will have to pay more for their data, the argument goes. 

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