Data caps and off-peak charges for internet access could be part of the 4G landscape, as operators are forced to adapt to next generation mobile services.
Delegates at a recent roundtable, featuring executives from Virgin Media Business, Alcatel Lucent and Three, said pricing will be among the biggest challenges for operators. EE has priced 4G at tariffs starting from £5 per month more than a standard 3G contract. Delegates said operators face a difficult balancing act in pricing the service. George Wareing, sales director for mobile and broadcast at Virgin Media Business, said: ‘A pricing scheme needs to be attractive enough for customers to make the active decision to upgrade, whilst also ensuring MNOs make some returns on their investment. It can’t just be about undercutting the competition, it’ll need to take the customer on a journey that’s not just about price.’
While EE’s initial marketing focus has been on speed, Jessica Ekholm, research director from Gartner, said that may not be a strong long term strategy because of the advances in 3G technology. The panel discussed how adding bundles and packages could drive differentiation. Wareing added: ‘Taking elements from existing incentives like cinema tickets or free giveaways, as well as off-peak charges being put together to create compelling price plans for customers - that gets away from shaving pennies off their bills.’
The panel added operators need to have their planning in place now, with Paul Adams, director of consumer marketing for EMEA at Alcatel Lucent, saying mobile data usage will comprise 80% of total internet use by 2016. It said the decision needs to be made whether operators will cap data use after a certain level of consumption. John Deleney, research director for consumer mobile at IDC, said because mobile devices are used so frequently on Wi-Fi connections, consumers expect the same quality of service when they connect through their mobile network. Wareing said: ‘The consumer needs to better understand the difference between the services they receive in their own homes compared to that on the street. Otherwise people will continue to see mobile data as a bottomless pit. We need to better explain the story of mobile connectivity and be totally transparent about the cost it entails.’
Britain’s position as a latecomer to the 4G party, with it lagging behind other global mobile markets, could provide an unexpected boon, thanks to the low spend of operators snapping up spectrum. Companies like O2 and Virgin Media choosing to build Wi-Fi networks, plus operators benefiting from infrastructure share projects, could lead to a better next generation network. Karl Thedeen, CEO of Transmode, said: ‘The UK could come out with the best connectivity in Europe, owing to an intense level of infrastructure-based competition.’
The panel said the increase in quality of service will lead to greater expectations among business and consumer customers. Martin Petheram, strategic development consultant at Three, said: ‘Improvements in capacity also tend to enable changes in customer behavior that in turn result in increased usage creating a kind of rising tide in demand.’
Recipe for success - what the uk needs to get right
Virgin Media Business’s George Wareing said the panel recommended the following steps to keep Britain at the forefront of the mobile industry.
• Innovative pricing plans If we are to learn anything from the roll out of 3G, it’s that the market cannot depend on a price war to tempt consumers. In the long-run, it’s not profitable and puts a squeeze on MNOs investing in much-needed infrastructure.
• Bundles of joy The value of mobile deals for the consumer should grow in importance. Can combining separate offers and initiatives into one package tempt the consumer more than just price?
• Transparency with consumers If consumers are to buy into the advantages of 4G, the industry needs to be totally transparent about what it is they are charging for. This means having total and complete access to their data usage balance.
• The right hardware As with 3G, the right kind of hardware will be needed to make 4G a success. Today, there is far more choice. Already there’s a massive range of smartphones which have a load of options. Looking further down the line, the amount of exciting features is only going to grow and prompt further adoption.
• Long term plan, longer term gain The UK’s in a position to become one of the best connected countries in Europe. The key to realising this will be in utilising the right technology to take advantage of the conditions.