Execs Differ on "Simplicity or Value" in Mobile Pricing

Usage-based billing is not the ideal solution to manage usage of mobile broadband capacity, nor is it the solution consumers prefer, one study of European mobile consumers suggests. A separate study suggests that, despite those findings, mobile service provider executives would rather bill by usage.

In other words, although many suppliers believe service providers would be better off using more-complex pricing schemes, service provider executives tend to prefer simple usage-based mechanisms. To be sure, that reflects the industry’s heritage.

But many mobile executives seem to prefer simplicity, rather than “value-based” mechanisms. In recent days, there has been more thinking about how to manage mobile networks destined to face high congestion problems because of growing volumes of video consumption, for example.

So some think monetary incentives can be used to induce bandwidth-conserving behavior. For example,
the survey by Tekelec suggests that about 40 percent of respondents would prefer to have a plan that has restrictions on video usage, so long as the plan was about $5 a month cheaper than a plan without such restrictions, says Randy Fuller, director of strategic marketing at Tekelec. About 60 percent would buy such a plan for a $10 a month discount.

About half of respondents would consider buying a package costing about $5 a month more than a standard package, if it offered live video streaming, but did not count against a usage cap. Perhaps 43 percent would buy a video on demand service, if it did not count against a cap and cost about $5 a month more than a standard plan.

"It is amazing how many people ignore what consumers prefer, in terms of how they buy video," said Fuller. "Our hypothesis was that while video is between 30 to 50 percent of bandwidth consumption, it is less important than that, to consumers."

That’s one form of pricing according to value. "A lot of tiered pricing models head in one of two directions, buy a bucket, or allow consumers to make trade offs," said Fuller. "If you want to use more services that cost more to deliver, you pay for that, and that, essentially, is what we tried to think through."

At least for the European subscribers polled, video was fourth behind Web browsing, email and navigation services in perceived value. Instant messaging, music and social networking ranked higher than voice, in terms of perceived value.

In fact, when asked to rank the value of various applications as standalone applications, Web browsing was valued at $6.94 a month. Voice was valued at $2.91 a month.

“Pricing based on value now seems to make more sense to end users,” said Fuller. “Byte-based pricing is not optimal.” But the larger conclusion one might draw is that “there is no one rate plan that is best for different consumers,” said Fuller.

Mobile Internet offers should be segmented to match end user demand, said Fuller. In fact, that sort of thing is common in Austria, Germany, France and Poland, for example. Orange  in several countries has a “happy hour” plan where you get an hour of unlimited usage, no matter what plan you are on, said Fuller.

The point is that “people should have choices,” he said. The big difference between fixed and mobile is that mobile bits are more expensive to deliver, Fuller added. But the fundamental issue is that mobile networks will continue to be more expensive than fixed networks.

Mobile Internet pricing perhaps has to move to tiered pricing, but some forms are better than others, Fuller said. Plans designed for messaging could be different than plans supporting lots of video consumption, for example.

The simplicity of an unlimited plan will appeal to some people, but not to all. Others might be quite fine with plans that feature buckets of usage, so long as they have an easy way to track their usage and control it.
Segmentation will work, Fuller argues, and also will allow mobile service providers to match usage and the cost of meeting that demand. Many consumers in the study preferred unlimited Web browsing and limited video consumption, for example.

Still, mobile executives seem to prefer simplicity.

Leap Plans "Bursty" Pricing

Leap Wireless has announced it plans to launch session-based data services over its existing tiered data pricing structure, a move that will allow "Cricket" customers to purchase faster data speeds for short periods of time. The company said it will launch the service in the first half of 2012.


The ability to temporarily pay for expedited or faster access is one example of on-demand pricing, congestion pricing or value-based pricing. But Leap is relatively unusual among mobile service providers, most of whom do not yet see the need or benefits of moving to value-based pricing mechanisms. 

There always is a tension between operational simplicity and sophistication in retail customer packaging and network management. Simple approaches often are cheaper, but at the cost of forfeiting creation of more-nuanced subscriber plans.


Likewise, policy management tools that can prioritize and shape bandwidth consumption can help service providers alleviate congestion and provide higher end user experience, where regulators allow such tools to be used. But there appear to be lots of trade offs.


Most executives would agree that flat-rate billing for unlimited use is a difficult and likely unsustainable retail packaging model for broadband access, especially in the mobile services realm. 


But what should be the replacement? That seems to be a tougher question. There always is a tension between simplicity and value where it comes to pricing, billing and retail packaging. 



As a corollary, executives must weigh “pricing by value,” or “pricing by application,” which means more complexity for consumers, or some simpler “pricing by consumption” approach.


Leap CEO and President Doug Hutcheson appears to believe that "pricing by value" will make sense for consumers, and also can be made simple enough that consumers will understand the value proposition. 


"The next big step for us that we believe is important is to add what's called session-based capability on top of that [tiered pricing]," Hutcheson said. "And that will give us a lot more rate plan flexibility."


Cricket might have more incentive than many other service providers to do so, though, as Cricket competes in the value segment of the mobile market. That suggests users frequently might prefer lower monthly charges, but occasionally have the need to consume more data, or occasionally ramp up speed. 


"Should you have a very low amount of data but want to buy more within a month, you'll have the ability to buy sessions or time periods where you can accelerate that speed, and it will be done very simply and very straightforward over the device or on a simple transaction with us," Hutcheson says. Leap to launch session-based pricing

A related idea is that applications have distinct and different value, and that pricing could reflect end user value. Few mobile service providers have been willing to attempt that sort of pricing, either. 

Mobile Coupon Redemption Rates to Outperform Paper Coupons 800%

Global redemption rates of mobile coupons will average at over eight percent by 2016, Juniper Research forecasts. "So what?" you might say, but consider that paper coupon redemption rates are about one percent.

North American and Western European markets are now beginning to follow the same growth path as the Far East and China and by 2016 there will be over 600 million regular mobile coupon users worldwide.

Though some would dismiss the whole mobile coupon business as a bit of a fad, with difficult economics for providers and few barriers to entry, others might say such "daily deals and offers" will be quite strategic for mobile payments platforms.

The reason is simple: mobile coupons address the question of "value" for retailers and end users to adopt mobile payments systems. Since few now believe new mobile payments systems will save retailers much money in transaction fees, and since in most cases check out using a "wave" approach does not necessarily save a customer much time, proponents have the challenge of showing where the value lies.

Juniper researchers argue that mobile coupons are particularly strategic for bricks and mortar retailers in their quest to regain ground lost to online retailers during the Internet revolution.

A mobile coupon bridges the divide between online and physical retailing and can be individually targeted to drive customers into stores. Mobile Coupon Redemption Rates

Apple’s Siri Feature Doubles IPhone Data Usage

Apple's voice recognition software, Siri, seems to encourage people to make more intensive use of data on their iPhones. In fact, some iPhone 4S users studies by Arieso seem to have doubled their data consumption as iPhone 4 users and three times as much data as iPhone 3G users, Arieso says.


And though one might dispute what it actually means, Arieso also finds that one percent of all mobile data users now consume 50 percent of all downstream capacity. In other words, extremely-heavy users now have become even heavier users of mobile data capacity.


Those changes in behavior illustrate the reasons there will never be “enough bandwidth.” As developers and users find they have more processing power, memory and bandwidth, new input and output methods and types of devices, developers create new apps and features that use those capabilities, and as Arieso has found, people respond.


Decades ago, serious cable TV engineers would scratch their heads when, about every five years, it was possible to double bandwidth. “What will anybody want to do with all that bandwidth?” they used to ask themselves. Telecom engineers probably can recall having similar thoughts. But it happens. Bloomberg notes that Apple’s Siri feature alone doubles data usage.


The point is that users seem to consume more mobile network bandwidth every year for a variety of reasons, ranging from heavier consumption of video to heavier use of their devices for other reasons, and sometimes because applications require more bandwidth.


Consider the shift from web browser operations to use of mobile apps. As it turns out, using a mobile app is itself more bandwidth intensive than the same operation using a Web browser. So virtually every trend in user behavior and application behavior is pushing towards consumption of more bandwidth.


Arieso's study of mobile bandwidth use also found that Google Nexus One users make twice as many data calls as iPhone 3G users. Arieso network study 


The Arieso analysis compares the data consumption of users of the latest smartphones against the iPhone3G as a “normalised benchmark”. The study found that different users and different devices exhibit very different demands on the network.


The most significant change in consumer behavior between 2010 and 2011 is the finding that iPhone 4S users download 2.76 times as much data as users of the iPhone 3G.


And while an Android-powered device maintains last year’s position at the top of the table for uplink data volumes, with HTC Desire S users typically uploading 3.23 times as much data as iPhone 3G users, the iPhone 4S falls just behind in this category with a typical 3.20 times as much data uploaded, Arieso says.


Using the iPhone 3G as the benchmark, though, many other devices place differential loads on mobile networks. In terms of data calls per subscriber, for example, three devices over-index compared to the iPhone 3G.


Since mobile networks are limited by spectrum allocations in ways that fixed networks are not, mobile networks are going to require more intensive management than fixed networks, irrespective of any “public policy” concerns about potential anti-competitive behavior on the part of mobile service providers. 


Some would say the most pernicious idea is that “all packets should be treated alike,” in terms of prioritization. But all bits are not equally valuable, nor are all applications equally tolerant of congestion and delay. Voice and video are good examples of delay-sensitive apps, but any user also will attest that when buying an airline ticket online, delay and latency are important issues.


Since mobile networks feature more latency than fixed networks network management is more crucial, to maintain end user experience. Bandwidth consumption is one genuine issue. But latency is the other important issue.

Visa CEO Says Mobile Service Providers Will Not Become Banks

Mobile service providers will not become full-fledged banks, Visa Chief Executive Joseph Saunders predicts, even though some are doing so, and others are looking at it.

At first blush, the notion that mobile service providers would think about becoming banks is not logical. But the burgeoning interest in mobile-facilitated commerce, with serious mobile wallet and mobile payment businesses, is the reason the idea is not far fetched.

If one assumes that large mobile service providers have to find sizable new businesses to enter as their voice, text messaging and broadband revenue streams mature, there is one over-riding concern.

Firms that earn scores of billions of dollars every year have a scale problem when considering new businesses to enter. If a firm seriously faces the challenge of replacing half its current revenue over a 10-year period, then a firm now earning $20 billion a year has to find replacement revenues of $10 billion a year.

Small business opportunities will not do the job. And most who have looked at the matter generally conclude that only a few opportunities actually have $1 billion a year potential for each and every firm that decides to participate. Among them are mobile banking, machine-to-machine services, mobile advertising and specialized services for business customers.

M2M services, including all sorts of telemetry services, could be a big and totally new business, with key utility and medical customers, for example. Specialized services for business customers, taking the form of embedding communications capabilities into key business applications, likewise is a logical and sizable opportunity.

Advertising already is a huge business, as is retail banking. Some will argue that some form of participation in payment transaction fees is interesting. Others will argue that business simply is not big enough. And that is why some believe mobile service providers, no matter what they now say, will have to consider banking, not just mobile payments.

In Africa, that already is happening. Mobile operators as banks

Keep in mind that Visa is a payments clearing network, not a "bank." Mobile service providers, if banks, would be customers for Visa, not competitors. That is not true of other participants in the mobile payments business.

Saunders also says Apple is a customer that could someday become a competitor, while PayPal already is a competitor, albeit one that also uses the Visa network to clear about half its transactions.

Visa Digital Wallet For Growth

Sprint Puts Investment in LightSquared on Hold

Sprint Nextel Corp. says it has put its investment in a partnership with LightSquared Inc. on hold, since LightSquared has not yet gotten approval from the Federal Communications Commission to redeploy its original satellite spectrum as the foundation for a terretrial Long Term Evolution mobile network.

“The companies have agreed to realigning our deployment timeline to coincide with potential FCC actions,” Scott Sloat, a spokesman for Overland Park, Kansas-based Sprint, said. Until approval is received, “both companies believe it is prudent to pull back on expenses,” he said. Sprint Puts Investment in LightSquared on Hold

LightSquared still has not managed to convince the GPS community or military users that its proposed use of former satellite frequencies can avoid interference with GPS receivers. Sprint deal hinges on spectrum approval

Tests continue to show interference issues, though. LightSquared is not the only entity proposing to re-purpose satellite spectrum to build new broadband Long Term Evolution fourth generation mobile networks. Dish Network also is asking the FCC for permission to build a network simialr to LightSquared.

The obvious potential here is the possibility that as many as three brand new LTE networks could be built in the U.S. market, in addition to the networks Sprint, Verizon Wireless and AT&T also are building. Some will argue that is too many 4G networks, but the business models and market segments might be different.

Dish Network will have a primary interest in providing mobile broadband services that augment its moves into new forms of TV distribution. Clearwire's LTE network, as will LightSquared's proposed network, are designed as wholesale platforms for other retail providers to use. 

Google TV Gets "Surprising" Traction

Google TV has many of the same goals as Apple TV, namely to provide a simpler interface, a new way to discover great web and TV content. Google TV wants to provide a more TV-like YouTube experience, while Apple TV aims to do the same for iTunes and other content.

Google says it now has more than 150 apps which developers have specifically built for TV. Up to this point, Apple TV and Google TV have used an "add a box" approach. Google TV appliances

But Google has been aiming to make Google TV capabilities a native feature of the TV set, and seems to be getting some traction in that regard. Google TV getting traction

Google TV partners appear to include LG, Samsung, Sony and Vizio, all of whom will be featuring built in Google TV features on at least some TVs. LG Google TV


Just how soon "many" makes and models will have embedded Google TV is not so clear. It might take several years. How long before Google TV is widely available?

Apple, on the other hand, might be planning to build and sell it own TVs. Apple might build its own TVs.

Mobile Wallet is an Ecosystem: You Can't "Own" It

The concept of an "ecosystem," though sometimes misused, is quite germane in the mobile wallet and mobile payments space, simply because no single entity can "own" the entire value chain.

"Both banks and telephone companies will slowly come to this realization: No one party can “own” the mobile wallet, and the winners will be those that collaborate and cooperate," notes Brett King at ABA Journal. How 2012 will change retail banking forever

The ecosystem has been necessary even in the arguably less-complex traditional credit card business. But mobile commerce, involving credentials, offers, marketing, advertising, in-store promotions, payment and content services, are much more complex.

More Evidence Text Message Market is Changing

There is growing evidence, largely from European markets, that people are starting to use messaging formats other than text messaging, with obvious implications for the perceived value and pricing for carrier-provided text messaging services.

Finland's largest carrier, Sonera, for example, recorded a 22 percent decline in texting on Christmas Eve in 2011, versus the same night in 2010.

It isn't that people are communicating less. They are just using different methods of communicating. Text Messaging Declines

Hong Kong also apparently saw a similar decrease on Christmas, dropping 14% from the same day in 2010. Netherlands service provider KPN provided an early warning when it announced significant declines in messaging volume earlier in 2010. KPN text message declines

Dutch telecoms regulator, OPTA, which shows a significant decline in the number of SMS sent in the Netherlands in first half of  2011 compared to the previous six-month period.

The country's largest operator, KPN, has also reported declining year-on-year messaging volumes over the last few quarters due to what it calls "changing customer behavior."

Wireless Intelligence says text messaging volumes are falling in France, Ireland, Spain and Portugal as well.

According to OPTA, the total number of SMS sent in the Netherlands stood at 5.7 billion for the first six months of the year, down 2.5 percent from 5.9 billion in the second half of  2010, even though total text messaging revenue rose slightly (0.6 percent) to EUR378 million during the period.

That should not come as a surprise. The number of over the top messaging alternatives has been growing for years. But there is a "network effect" for messaging, as there is for any other communications tool. Until a user is fairly sure that nearly everybody he or she wants to communicate with can be reached by a particular tool, adoption is slower.

But there always is a tipping point, where the expectation changes from "I doubt this person uses this tool" to "there is a good chance they use this tool." Finally, there is the point of ubiquity, when the assumption simply is that "everybody" uses the tool.

Also, the history of text messaging and email are instructive. Though most cannot remember a time when it was so, email and messaging services once upon a time ere not federated. In other words, you could not send messages across domains.

History also tells us what happens after federation: usage explodes. With alternative messaging platforms, we still are not in a "full federation" mode, where anybody can send messages to any other user, irrespective of what device, operating system, service provider or application they prefer to use. That day will come, though.

When it does, usage of text messaging is going to fall sharply, unless it is a feature people can use for no incremental charge.

Google Chrome Gets Faster, Safer

Google has released a Beta version of its Chrome browser that is supposed to be faster, and more secure, as well.


"One of the things people like best about Chrome is that it loads web pages quickly," Google's Chrome blog says. "To get you where you want to go even faster, Chrome will now start loading some web pages in the background, even before you’ve finished typing the URL in the omnibox." 

"If the URL auto-completes to a site you’re very likely to visit, Chrome will begin to prerender the page."

Pre-rendering reduces the time between when you hit Enter and when you see your fully-loaded web page--in some cases, the web page appears instantly.


On the security front, improvements to Chrome’s Safe Browsing technology should help protect you from additional types of malware attacks. Google Chrome Blog

Previously, Chrome focused primarily on protecting you from sites that would exploit your computer with no user interaction required. Now, we’re seeing an increase in malicious websites that try to convince you to download and run a file that will harm your computer. Some websites even pretend this malicious file is a free anti-virus product.


To help protect you against malicious downloads, Chrome now includes expanded functionality to analyze executable files (such as “.exe” and “.msi” files) that you download. If a file you download is known to be bad, or is hosted on a website that hosts a relatively high percentage of malicious downloads, Chrome will warn you that the file appears to be malicious and that you should discard it.


I've just loaded it and it does seem to execute faster. I'm amazed. 

Who Are the Top 10 Power Influencers in Mobile?

 

Thanks, Traackr. Hat tip to Forbes.

See this 10 most influential or Traacker

The Digital Living Room

Over the last several decades, virtually all changes in consumer use of television have shifted consumption in the direction of non-linear consumption.

You can argue about whether the shift to "interactive television" has happened, or what that actually means.

Does Social Messaging Displace Text Messaging?

The data is impressionistic, but one user has discovered that ability to send Apple iOS 5 "iMessages" does reduce the amount of text messaging.

Apple's iMessage is a service that seeks to replace text messaging, and in at least this case, seems to do precisely that.

The iMessage service sends messages (text, images or video) using any broadband access mechanism, defaulting to text messaging if the recipient cannot receive such messages. It probably is important to note that the biggest potential effects would be seen where one iOS 5 user sends lots of messages to other iOS 5 users.

 What iMessage cuts text messaging

Apps Consume Much More Bandwidth than Web Sessions

A recent test of app data consumption suggests that using a mobile app rather than a browser to view the same content has vastly different bandwidth consumption implications.

The test compared PC and tablet web browsers to view the Wall Street Journal home page, with an iPad Wall Street Journal app to reach the same home page.

The data consumed using the Web browser on the iPad and on a PC to access the WSJ home page was similar, both averaging around 2.2 megabytes in total consumption (sent and received).  The same test was run accessing the The Weather Channel site, which revealed similar results (around .9MB in total consumption).

Although the iPad Web browser consumed slightly more data than the PC web browser for TWC, the difference was not enough to warrant further investigation, says Greg Wolf, a principal with NetForecast who conducted the test. However, using the iPad apps to read the WSJ and TWC tells is a very different story.

The WSJ on average consumed 47MB of data when downloading a daily issue, while TWC consumed on average 7MB just to display the main menu.

 In other words, the WSJ iPad app consumed 21 times more data than accessing the WSJ homepage using a Web browser, and the TWC app consumed over 7 times more data than accessing the TWC main menu using a Web browser.

Putting aside the obvious fact that the experience of using a native iPad app is designed to deliver a richer, multimedia experience, the point here is that this experience comes at a price. App data consumption much higher than web sessions

Video and Cloud Killer Apps for 4G?

Some observers do not believe there will be any "killer app" for Long Term Evolution and 4G networks. But in a survey of 150 mobile industry executives, "video" and "cloud computing" are candidates for such status, if there are any consensus candidates.

About half of the respondents seem to think 4G mobile service is just "faster" access.

2012 in mobile