Strategies for Pricing Plans and Family Dynamics

Last month, Verizon Wireless was the first large operator
to announce a shared data plan, but no sooner did Verizon reveals its plans, but its
archrival, AT&T, said it would quickly follow suit with a similar program.


The stakes couldn-t be higher. Mobile operators who can
successfully lure families and affinity groups to their shared data plans will achieve
new levels of customer lock-in. In turn,that capability will enable them to aggressively
cherry-pick a competitor’s base.


A couple years ago, cVidya, adopted the new tag line,
Revenue Intelligence” to explain our mission as a company. And frankly, shared data plans are
a perfect example of what that moniker means. Service providers can only succeed with
shared data plans if they canintegrate a wide range of analytic and business control


In this column, I’m going to shine a spotlight on a few
crucial functions that operators need to get right here, especially: offering the right price
plan, ensuring that any bandwidth throttling is handled correctly, and addressing some new
fraud related to shared data plans.


Pricing Plans and Family Dynamics


You can look at share data plans in two ways. On the one
hand, it’s a fresh, greenfield opportunity that could rake in rich profits. But the flip
side is also true: if shared data services are priced wrong and targeted at the wrong
subscribers, you could lose a ton of loyal customers in a hurry.


All of which points to the absolute necessity of having a
great analytic tool behind you.


Frankly, earlier generations of pricing analytics tools
are of limited usefulness in this new area. Normally, when you create new price plans, you
analyze the behavior of typical users and determine how the proposed price plan will likely
affect current subscribers. But shared data plans introduce a new wrinkle. Tracking individual
usage is not enough. You also need to analyze family usage as a whole.

And that factor causes the number of factors and
variables to juggle to greatly expand. If you offer the plan to more members of the family, what
will encourage more data usage or not? The short and long term effects of these new share
data family plans are completely unknown. Will the whole family move? Will the people most
attracted to these plans be the family members using iPads or iPhones?


Having a carefully thought out rollout strategy is also
key. Which customers should you encourage to move to shared data plans? And how should
you treat valuable customers

who are already on lucrative individual plans? Clearly,
many scenarios need to be tested to ensure that revenue is maximized during the transition –
and beyond.


You need a strong tool to simulate the many options.
cVidya’s OfferImpact is one tool you should consider. The solution has been recently upgraded
with shared data plans in mind.


Everything needs to be tested. But if you’re stuck with a
limited homegrown tool, maybe you can-t investigate enough options. And given the risks
involved, you want to look at every viable option.


The more testing, what-if analyses, and simulations you
can do, the better the chance that your launch and subsequent corrections and revisions will
succeed in this brave new pricing world.


Ensuring Customer Satisfaction through Pricing Plan


Mediating the needs of different family members is a
challenge all its own.


Let’s say the kids like to download HD movies. Well, a
single High Def (HD) movie consumes about 3 gigabytes of data. And if the family has only budgeted
for 10 gigabytes a month, will Mom and Dad be satisfied to reserve one gigabyte for
themselves and allocate the remaining 9 gigs to their kids? Probably not. And what
happens when the service gets maxed out?


These issues are all brand new challenges, but the
current thinking is that Mom and Dad need to control their family’s bandwidth usage and budget
of family members. And that data budgeting might extend to certain types of usage.
For instance, parents could allocate a certain percentage to movies vs. email vs. web surfing,


The danger, of course, is that you can make the
configuration option so complex that Mom or Dad is elevated to the role of Family CIO.


Though some form of plan management software will clearly
emerge, a bigger issue is the operator’s ability to suggest appropriate plans as a
family’s understanding of its usage evolves or the family tries to staying in a budget. If
you see that most of your data is movies, analytics can suggest, say, a plan that takes advantage
of less costly late night downloads.


And analyzing and suggesting the right data share plan is
a perfect job for revenue assurance and related analytics solutions. But it must be done
proactively. You don-t want the customer to call and say, Why is my throughput so slow?”


cVidya’s OfferAdvisor product has the analytics built in
to propose the right plans for the families. It can also recommend what the policies should
be and at one point you should make offers to specific demographic groups.


Network Policy Control: The Role of the PCRF


This subject of maxing out family usage brings up the
issue of network policy control – the rules an operator sets for controlling the bandwidth a
family uses each month.


Normally there are two policy options widely used when a
data allowance is fully consumed, either: 1) throttle bandwidth down which reduces the
quality of the user experience; or 2) charge a fee for an additional data allowance.


A key component in network policy control – and a brand
new monitoring point for RA and fraud professionals – is the Policy Control and Rules
Function or PCRF system. Now, I’ll admit that as I travel around the world and talk to
clients, the first reaction I often get from Revenue Assurance and Fraud Management professionals is
PCRF? What exactly is that?”


PCRF has actually been a mobile network component for a
few years now. Basically the PCRF’s job is keep track (meter) of bandwidth
consumption, and set policies, like QoS, according to the consumption. The reason you haven-t
heard much about it yet is that the PCRF kind of sat quietly in a corner of the network, and
folks who worry about revenue risks never had to be concerned about it – until now.


Why Poor PCRF Monitoring is a Hazard to Customer


So why is monitoring PCRF data so important?


Well, it boils down to one simple fact: users can get
very upset when you play around with their bandwidth. If you cut a family’s service in error,
you’ve got four angry customers to answer to, not just one. You could lose that family’s
business forever. And if they’re really upset, they even tell their entire social network about
their experience.


This is precisely why you, as an operator, need to be
constantly checking the PCRF, ensuring it is operating correctly, and keeping accurate track of
bandwidth consumed.


Now, contrary to what you may think, monitoring PCRF data
doesn-t require a big evolution in.


RA tools. What it does require, however, is an evolution
in an RA or Fraud manager’s state of mind.


Is the PCRF data being managed correctly? Are the rules
associated with that policy controller working as planned? Did a Fraudster tamper
with the policies?


The shift to shared data plans will require constant
monitoring of family usage, and in North America, where the vast majority of the mobile business
is postpaid, the effect will be to make postpaid billing shops much more on-line and


Revenue Intelligence specialists will definitely need to
come up to speed on PCRF. I firmly believe that investigated problems at the policy
controller will soon become as important as checking for HLR and CRM glitches are today.


Most RA software vendors are capable of adding the
controls. It’s the knowhow that’s the important part, and this PCRF areas is a place where
cVidya has relevant experience.


The Fraud Management Challenge: Mobile Device Switching


One last area of concern is fraud. A big window we feel
fraudsters will try to exploit is the difference between the price offered for one device
versus another. Normally Tablets are banned from doing regular Calls and SMS activities, yet
certain models permit it (e.g. Samsung Galaxi 7.7 Tab), plus others can be hacked to
permit it.


To get a better understanding of this issue, we’ll use
prices from Verizon’s pre-service announcement, even though we know that those prices could
change when the product launches.


As currently conceived, Verizon’s Share Everything”
service includes a major price gap between Tablets and Smartphones within the shared data
plan. Smartphones cost $40 a month and Tablets cost only $10. No doubt, a key factor
in that price differential is the fact that Tablets are often used where free WiFi service is
available. Smartphones, meanwhile, are more likely used on the town and in moving vehicles
where you need to access the relatively more expensive 3G radio network.


Household might be tempted to commit small” fraudulent
activities, e.g., they can take advantage of this price disparity by fooling the operator
into thinking a Smartphone is a Tablet. Tampering with the SIM card or other device
interface could accomplish this objective.


So it’s important for operators to be aware of these
tricks. Using the Verizon Shared Everything Plan as an example, if a family has 3
Smartphones masking as Tablets, the equivalent lost revenue could be $70 per month and over a
$800 a year. That’s huge.


One solution is to constantly monitor the type of
equipment the SIM card is being used in and base the subscription on the equipment ID, not just a
SIM card. Another solution is to verify that every SIM card sold to a tablet is associated
with a data plan only in the Operator’s network, and to base the pricing on the SIM
capabilities and not the type of device. cVidya has prepared for this issue and
incorporated that capability in our FraudView product.




In conclusion, the new shared data family plans represent
a big paradigm shift. To win this emerging assurance area, you must first offer the right
price plans to the right subscribers — and be able to quickly adapt to what competitors are
offering. Second, you must take steps to stop insider and equipment swapping fraud. Finally you
must wrap tight business controls around policy-driven bandwidth throttling that’s bound to
anger subscribers if they are notimplemented correctly.


So, may the Olympics for shared data plans begin! And if
you plan to be a champion in this arena, don-t forget to compete with the very best Revenue
Intelligence tools and knowhow.


Amit Daniel, EVP of Marketing and Business Development at


[email protected]