Friday, October 19, 2012

"Next-Generation"Pricing Models?

Any number of observers have speculated or argued for "innovative" pricing models for broadband access services, with some arguing for  "value-based" pricing. Some might argue mobile service providers are using Long Term Evolution to shift in that direction. Others might not agree.

Based on a survey of 65 mobile operators offerng LTE services, about half "have used the deployment of LTE as an opportunity to introduce a new form of pricing for mobile broadband services."

The new strategy, which supersedes the earlier unlimited data model, uses download/upload speeds as well as data allowances to differentiate on price, says Wireless Intelligence

The speed-based tariffs are most common in Europe, where 90 percent of mobile service providers surveyed offer them. These tariffs are less popular across the Middle East, Asia Pacific and Africa, and least prevalent in North America and Latin America. 

It might be one thing to price access differently, based on speed or size of consumption allowance.   It might be quit another matter to craft plans that are more closely tied to the value of the applications people are using, the value of those activities, the time of day or setting where apps are used.

That service providers have not done more in those areas is partly explained by the challenges of tracking usage and billing based on that usage. But some observers might not think it is quite so "innovative" to bill based on access speed or size of a consumption quota. 

Basically, billing by volume (speed essentially is a volume metric) is not different from the ways electricity or water are billed. Calling that "innovative" is stretching matters, one might argue. 

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