European carriers such as Orange are exploring innovative mobile pricing plans that might avert congestion—and even enhance profits—while pleasing subscribers with customized data packages
Even as three carriers in Europe argued last week that Google and Apple should pay them for transporting the providers' content to wireless data subscribers, operators there are exploring plans to charge users according to the time of day and type of application used. Innovative pricing plans could help operators control the amount of data on their networks while boosting profits by delivering such services as Facebook and Twitter to customers. Carriers are already implementing pricing plans that enable them to recoup their investment in their networks, but few of those plans address the issue of congestion.They address only the carriers' efforts to get more money for delivering their bits. For those who are really concerned about congestion, the solution isn't hitting up Apple or Google for more money; it's in congestion or dynamic pricing, which respectively charge people more to access content at times when the network is congested or give customers incentives to shift usage to times when the network doesn't have a lot of traffic. For example, some operators offer "Happy Hours" in which they don't charge users for data, say between midnight and 6:00 a.m. A clever user could download movies at that time to consume later, when networks are more congested. Most carriers have a hard time getting neophyte smartphone subscribers to use data. Some are trying to deliver plans that exploit a desire to access certain applications, as opposed to the Internet as a whole. "It's no longer about the bits and bytes; it's about the application and the issue of what the consumers wants to use as opposed to the operators or the content providers' choosings," says Jonathon Gordon, a marketing executive with Allot Networks, a deep packet inspection (DPI) vendor that helps service providers implement such plans by tracking which types of applications are running over their pipes. A $5 Data Plan Just To Use Facebook?
Gordon envisions carrier plans that can provide unlimited access to certain applications such as Facebook or text messaging apps, as opposed to a bucket of megabytes or gigabytes. DPI filtering can make this a reality. As much as I believe people should have access to the whole Internet on their phones, the idea of paying $5 a month for a Facebook plan makes sense for people who might otherwise balk at paying $25 for a data plan just to use Facebook and little else. Much of the Web's appeal, however, is that one part leads to many other parts of the Web. People with application-specific plans might find themselves unable to follow links to the wider Web—or worse, rack up extra charges for doing so. There's also the idea that as someone becomes comfortable using data on their phones, they tend to graduate to other apps or new uses; many people might adopt such plans, then discard them. Rather than erecting application-specific fences or setting buckets of minutes with overage charges, operators might do well to follow the example of Orange, which has tried to make gigabyte bucket plans accessible while still controlling data usage.
As carriers go, Orange is optimizing its pricing plans in exactly the manner Gordon describes. The operator, with customers in nearly three dozen countries, offers up to nine different pricing plans in certain of its regions; these are modeled (and named) after different animals. For example, Orange sent me an e-mail explaining that its Panther plan for heavy users costs £25 ($39.40) for 10GB of mobile data and voice a month and its £15 monthly Dolphin plan lets users select a so-called Happy Hour of unlimited surfing from the following choices: 8 a.m. to 9 a.m. (the morning commute); 12 p.m. to 1 p.m. (lunch break); 4 p.m. to 5 p.m. (late afternoon); or 10 p.m. to 11 p.m. (late night). Smart SIM for Multiple Devices
Orange has taken the process to its logical conclusion and is now testing personalized pricing plans for subscribers with multiple mobile devices, whereby customer service representatives work with individuals to set up appropriate charging structures, says Olaf Swantee, head of global mobile services at Orange. In a plan that's more highly tailored than that of Rogers Communications (which Kevin covered earlier this week), Orange works with subscribers in Austria to provide multiple SIM cards for multiple devices, such as tablets, laptop, smartphones, e-readers, or whatever else someone might wish to connect to a mobile broadband network. The plan, called Smart SIM, allows one phone number and one rate plan for up to five devices. Since the minutes and data can be shared on all devices, customers don't need to keep track of each balance or view different bills. The plan charges a one-time activation fee per smart SIM, a basic fee for the first SIM card (the second SIM is free), and £2 ($2.60) per month for each subsequent SIM. Carriers will have to adopt some of these or other pricing shifts in order to recruit subscribers to their data networks while balancing usage and network capacities. Such plans don't have to curb profits because many options might enhance margins. Offering unlimited, anytime data on wireless phones doesn't make much sense in view of network constraints; neither does bullying Google or Apple to pay up for delivering the content that makes networks worthwhile in the first place. If a market is competitive, plans transparent, and consumers able to switch carriers easily, pricing issues should resolve over time. Those are big ifs in the U.S., however. Maybe that's why U.S. wireless carriers aren't yet talking about charging Google and Apple. They still can milk subscribers for hefty charges. Also from GigaOM: Who Will Profit From Broadband Innovation? (subscription required) Did Your Town Get Fiber? Google's Not Telling Yet Earthquakes, Bieber and iPads: Apple's Year in Web Trends Zipcar Raises $21M; IPO Off? Cord Cutters: Turn Your PC Into a Media Center