Mobile Service Menu of the Future

August 31, 2010 at 5:37 pm | Posted in Uncategorized | Leave a comment

Subscribers select:
they want (Voice/Text/Data/Content)
How much (À la carte, or Bulk), and
When they want to pay it (Prepaid or Postpaid)

The days of voice plans are ending. The menu of services will change to reflect changing customer demands.

How will this change how Customers purchase mobile services?

Choice of Service Plan(s), Choice of Quantity

For each service, Customers can choose whether they wish to purchase a bulk package (e.g., of Voice minutes, Text messages, MB of Internet use, or Content consumed) or pay for it per incremental use.  This represents a significant change from the current service menu: as Customers’ appetites change, so does the service menu.

No Mandatory Components

For example, although operators may wish to mandate that all subscribers purchase large buckets of voice minutes, Operators will be forced to abandon this requirement. Customer freedom of choice of Service plan and choice of Quantity will enable several, new choices. Many Customers (that prefer text of Data services) will not wish to subscribe to a monthly Voice plan with 500 voice minutes/month. For example, some Customers may wish to purchase only an unlimited Text message service (no Voice and no Internet data service). Other customers may wish to subscribe to a monthly plan for a large bucket of data, and choose to “Pay as you Go” for any text messages or voice calls that they use.

Evolution of Prepaid to “Pay as you Go”

Many new customers will wish to avoid monthly contracts altogether, and purchase these services on a Prepaid basis, paying incrementally per use. These “Pay as you Go” service options represent an evolution of the Prepaid service plans of today, updated to allow flexible purchase of any mixture of Voice/Text/Data/Content from their account balance.

PaymentChoose one:
( ) Postpaid (monthly plan)
( ) Prepaid

Voice Choose one:
( ) No bucket voice minutes, “Pay as you Go”
( ) Small bucket of minutes
( ) Large bucket of minutes

Text Choose one:
( ) No bucket of text messages, “Pay as you Go”
( ) Small bucket of text messages
( ) Large bucket of text messages

Data Choose one:
( ) No bucket of data use, “Pay as you Go”
( ) Small bucket of data use
( ) Large bucket of data use

Customers wish to purchase what they need. As Customers’ appetite and need for services changes from Voice to Text and Data (see “Voice being replaced by Text and Data“), the available service plans must change, too.

What needs to Change?

Operators offer many of these choices, but Prepaid users can not buy data plans. Why?!? Subscribers can purchase Voice & SMS and even Content from a pre-funded account, why not data, too? Since 80% of the world’s mobile subscribers are Prepaid, Operators will want and need to allow subscribers to purchase data services (on a “pay for incremental use” basis) on a Prepaid basis.

Pay per use Data is not yet available. Operators want to encourage subscribers to start to use data services, and this will be an important technique. Operators fear that since Subscribers do not have a good feel about how much data they are using, they may experience sticker shock. “If I browse the Internet for an hour, how much will it cost?” NTT DoCoMo has very successfully charged for incremental data use on a per-MB basis, but there are better ways to do this (such as flat fee per hour or per day). Pricing for data use needs to get simpler before subscribers are willing to jump in a use data on a “pay per use” basis.

Operators have successfully delivered “Pay as you go” plans for Voice and Text, so there is a good experience to build upon. Soon, Customers will be able to purchase as much or as little of each category: Voice, Text, Data, and Content.

Update: Mobile Operators offer Internet to PrePaid users

As I forecast (above), mobile operators are bringing Mobile Internet service to PrePaid users, filling a big gap in the available pricing plans. T-Mobile USA announced that they are adding PrePaid data plans that can be PrePaid [as reported by Maisie Ramsay in Wireless Week, 14 October 2010]. The carrier said it will begin offering two data options for customers starting at 200 MB per month for $10 on postpaid plans and $15 per month on those going without a contract. The plans follow recent tiered packages launched by AT&T Mobility and plans by Verizon Wireless to announce a similar offering in the coming weeks.RCR Wireless reported. Previously, in the U.S., AT&T Mobility offered a lower-cost PostPaid plan, but this was an incremental change and still required that the user commit to a contract. In contrast, T-Mobile’s plan serves the currently unserved PrePaid market segment. As a trend, PrePaid data plans represent a huge expansion of the potential number of Mobile Internet users, since 75% of mobile subscribers (globally) are PrePaid subscribers.

AT&T Mobility’s move to create a lower-cost plan for mobile data was smart (as reported by my friend, Sue Rudd). Nice move, considering that they are expanding their iPhone base in the U.S. before they lost their iPhone exclusive. However, the T-Mobile move is far more important and represents a fundamental change to deliver the same services to both PostPaid and PrePaid (contract) subscribers.

The future for Mobile Operators is in data services, and now Operators are moving to serve the dominant way that subscribers prefer to pay: PrePaid.

Update: More PrePaid data offerings

Sue Rudd of Strategy Analytics pointed out that there are some additional PrePaid data offerings around the world, especially in Europe (where PrePaid subscribers are treated very differently than in the U.S.). She pointed to some offerings from Wind (3G Italy) , Virgin (MVNO, USA), and several WiMAX offerings such as Clearwire (WiMAX, USA). Clearwire represents one of a growing set of “Semi-Prepaid” plans offering Daily and Weekly contracts for Mobile Broadband that have been available since mod-2010.


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