Profit beyond flat rates

Operators around the world are launching mobile broadband, and the market is expected to continue to grow rapidly. By 2014, it is estimated that 80 percent of all internet broadband access will be mobile.

While this boom is a boon to operators as voice revenues dry up and competition in saturated markets intensifies, there are challenges that need to be addressed to capture the business opportunity of mobile broadband and ensure it is profitable.

Niclas Melin, portfolio marketing manager for Revenue Management at Ericsson’s Multimedia business, explains that most operators that have launched mobile broadband services have offered unlimited flat-fee price plans.

“This was a good first step to gain initial subscriber uptake, but now it is time to move beyond that solution,” he says. “More or less every operator with unlimited flat-fee pricing for mobile broadband now faces the same problems: 90 percent of the traffic is generated by 5-10 percent of the customer base, causing congestion in the network and poor service quality for the rest of the customers.”

The question now is how can operators find a way to manage capacity and customer satisfaction, and price mobile broadband services in a way that enables profitable growth?

Melin stresses that Ericsson has the solutions and competence to enable profitable growth beyond unlimited flat-rate fees.

He says: “Ericsson provides the solutions and end-to-end expertise that mobile operators need to grow revenues from mobile broadband services in a profitable way. The end-to-end capabilities required are distributed across the real-time charging system, the packet core network and the radio network, and all these capabilities need to be in place. Ericsson can deliver all of this.

“At the same time, service uptake can be increased, capacity utilization can be managed and a good user experience can be provided.”

Melin says that differentiation is key for success. “Several operators have already started to move away from unlimited flat-fee pricing for mobile broadband and created more differentiated offerings. Typical differentiators include those based on volume of data that can be downloaded or the bandwidth of the connection. But it also attractive to be able to differentiate prices more dynamically based on capacity utilization in the network.”

The job is not done there, though. Melin stresses that once differentiated mobile broadband prices are introduced, it is critical for operators to provide consumers with spending control.

“Consumers must be put in total control in order to make them feel comfortable,” he says.

Real-time charging and policy control are required to allow users to manage spending. Users need to be notified before additional charges are applied or their bandwidth is downgraded as a result of data consumption.

However, Melin says that it is not only the consumer who benefits from real-time charging and notifications.  “Real-time services also provide operators with a powerful and direct way to communicate with their customers to inform about cross-service promotions and discounts,” he says.

“For example, users who have consumed all the data included in their package are given the option to continue with a lower bandwidth for the rest of the month, top-up to continue at the same speed, or upgrade to a bigger broadband package at no extra charge for the rest of the month. This will further drive revenues and increase customer satisfaction.”

Profitable growth and consumer comfort are not the only drivers for mobile operators, Melin says. Implementing real-time charging and policy control could help operators meet regulatory demands.

“Bodies such as the European Community require operators to be able to provide guaranteed spending caps and control for mobile broadband users who are roaming internationally,” Melin explains. “That requirement is met with real-time charging and notification.”