TechZine – Alcatel-Lucent

Business

It’s Time for New Mobile Data Plans

Highlights

  • People are afraid of the costs of going beyond mobile data plan limits.
  • Service providers need to stimulate data usage to ensure strong return on investments.
  • Data plans that are simple, personal and rewarding encourage data use.

The data fear factor inhibits usage

For investments in 4G LTE networks to pay off, service providers need flexible data plans that encourage people to use more data. Most of today’s mobile data plans actually discourage large-scale data consumption. They’re restrictive, inflexible, and often have heavy penalties associated with them. Fear of running out of data or facing hefty surcharges can stop people from using more data. And idle networks won’t generate the revenues needed for return on investment.

People are afraid to consume large volumes of data because they aren’t really aware of what it is going to cost them. They know how much data they’ve purchased with their plan, and they know the overall cost of their plan. But they have no idea how fast they’re going to use up the data they’ve purchased. And if they do know, they typically can’t adapt their plans fast enough to match their changing needs.

According to a 2012 survey of more than 600 mobile data users in the United Kingdom, almost half didn’t know how much data they were using on average each month. And 84 percent didn’t know how much it would cost them to go beyond their data limit.[1]

A bad experience is bad business

The financial fear factor associated with today’s mobile data plans creates a negative customer experience. Dissatisfied customers are bad for business. They will churn to other service providers, sharing their frustration with friends, family and co-workers as they go. A study by the IBM Institute for Business Value ties customer experience directly to shareholder value[2] (Figure 1).

Customer experience directly impacts shareholder value.

Figure 1. Customer experience directly impacts shareholder value.

3 ways to get people hooked on data

Moving to more customer-friendly mobile data plans through a mobile app can help service providers eliminate the data fear factor, improve the customer experience, and create a mobile retail channel that complements existing retail channels. Three strategies will help service providers get people really hooked on data.                                                         

Make it easy

Mobile data plans that make it easy for customers to understand and manage their spending encourage new spending. This strategy is all about visibility and control. When customers can access a single, branded mobile app to track their data consumption, change their services, perform self-care, and control their mobile data experience in real time, they will feel more comfortable making additional purchases.

Imagine an über-connected family that is traveling on vacation. The kids want to watch a movie on the tablet, but mom and dad don’t know if they have enough data remaining on their plan. If they can quickly check, and purchase additional data at a known price they don’t have to worry about bill shock at the end of the month. This use case is even applicable to managing roaming usage. Or, maybe they have shared data plans and can transfer data allowance from one family member to another in real time. And they can set limits so the kids don’t get carried away and use the entire family’s data allowance. This can all be done from a single simple-to-use interface.

Service providers can extend this simplicity and control to other services, including voice, SMS, converged services, and proactive self-care services to help increase brand equity and consumer confidence toward future purchases.

Make it personal

When it comes to mobile data plans, one size does not fit all. People have different lifestyles and preferences. Data plans that can instantly deliver offers to match customers’ needs, habits, tastes and location will appeal to their emotions. Similar to the way we might make an impulse purchase in a store, the right data offer at the right time can lead to a spontaneous purchase.

Consider the vacationing family again. Along with watching movies on the tablet, the kids use social networking to keep in touch with friends. Mom needs to stay in touch with the latest developments in her industry. And dad wants to keep up with his favorite sports team.

Their service provider can tell the family is on the move and offers an attractive roaming package, as the service provider knows the family devices are registered with the same visitor network out of their home state or country. Because mom and dad have been loyal subscribers for several years, the service provider may offer a free social media day pass to their favorite social network that does not count toward their mobile data allowance for given hours of a day. Now the kids won’t gobble up the roaming data mom and dad just purchased. How can they refuse?

Make it rewarding

Service providers can also extend some of the key capabilities behind customer-friendly data plans — flexible payment and policy and charging control are 2 examples — to partners. Now service providers can work together with retailers, advertisers, and content providers to build enticing new offers that will benefit both companies.

For example, retailers could purchase blocks of mobile data points from service providers at a bulk or wholesale rate. They could then use these points to reward shoppers for their loyalty. Shoppers could redeem the points to increase their mobile data allowance, pay for new data services or offset existing bills. Each partner can monetize its capabilities while delivering the personalized experiences that customers crave. This type of creative partnership has already begun. Coca-Cola has already partnered with a service provider to test its “Happiness Refill” concept, which rewards users with free mobile data credits and Internet access through an exclusive Coca-Cola mobile browser.

Look long term

Some service providers may still believe that today’s approach to mobile data plans is just fine. But that’s a short-sighted view.

  • Customers who are oversubscribed are paying for data they’re not using. Nobody is ever happy overpaying.
  • Customers who are undersubscribed either run out of data or pay surcharges to access more data — neither of which makes them happy.
  • Current pricing plans do not take into consideration increasing video calling and consumption patterns. Most data pricing plans will not be enough to satisfy the usage patterns of many customer segments (wireless nomads, members of family plans and enterprise workers).

With these situations, service providers are taking risks. People may stop using data when using up the initial allowance, or they may become more prone to switch service providers when opportunities approach. Either result makes it difficult for service providers to generate the stable and predictable revenues needed for a strong return on 4G LTE investments.

We’re already seeing some leading service providers introduce innovative pricing plans such as those that offer customers the ability to share a single mobile data plan across multiple devices. As part of these plans, customers pay a device access fee to share data across devices and gain unlimited use of voice and SMS services. Other 4G service providers will likely follow this trend. To generate revenue for the über-connected market, service providers will need ever more creative charging models that consolidate multiple subscriptions, promote device adoption and facilitate revenue uptake. This is true even for those service providers offering unlimited mobile data plans.

People already have access to the networks, devices, apps, and services needed to get really hooked on data. Now it’s time for mobile data plans to evolve into more personalized, content-based, consolidated and rewarding pricing. To do so, service providers will need a flexible and adaptable system that supports new data pricing plans and offers based on their customers’ unique lifestyles and preferences.

To contact the author or request additional information, please send an e-mail to techzine.editor@alcatel-lucent.com.

  1. [1] PricewaterhouseCoopers LLP “Managing your megabytes: How fear of data charges is driving mobile users to Wi-Fi,” February 2012.
  2. [2] IBM Institute for Business Value Global Communications Consumer Survey, 2011.