By
Telecom Lead Team: Unlimited data tariffs for LTE are unsustainable because of
the traffic growth and management issues they generate. Leading operators in
Asia-Pacific, the US, and Sweden are devising new ways to transition to LTE
without continuing to offer burdensome unlimited tariffs. Experience is showing
that the move to LTE without flat rates can be achieved with positive results.
The
best method for the transition is to abandon unlimited tariffs from the launch
of LTE. Operators should not feel compelled to simply roll over their existing
pricing models. This has been the approach taken by SK Telecom and LG U+ in
South Korea, Singapore Telecom in Singapore, and AT&T Wireless in the US.
Other
operators that initially offered unlimited LTE tariffs have now also begun to
change their pricing models. In Asia-Pacific, Hong Kong mobile operator CSL
recently adopted a new LTE tariff strategy centered on volume-based pricing,
which has proven popular with customers. US mobile operator Verizon Wireless
also phased out unlimited data tariffs for LTE in July 2011, and this has not
adversely affected its LTE uptake.
When
transitioning to volume-based pricing models, operators should avoid
complicated pricing structures. Instead, they should focus on educating their
customers on their data requirements and usage limits so as to limit the
possibility of bill shock. Operators should also introduce measures such as
maximum excess usage charges for the same reason.
In
addition, operators must look to exploit the upsell opportunities that will be
presented by the shift to alternative pricing models, particularly moving
customers to higher data allowances as data usage grows, according to Nicole McCormick,
Ovum Senior Analyst Telco Strategy.
