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Carriers miss a huge opportunity with inadequate LTE pricing models, analysts from Ovum say

Posted: , by Victor H.

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Carriers miss a huge opportunity with inadequate LTE pricing models, analysts from Ovum say
The massive worldwide adoption of LTE has brought huge opportunities for growth, but carriers are by large missing them with inadequate pricing schemes granting users unlimited data or large data buckets, Independent telecom analysts from Ovum concluded. While practically every user would want unlimited data, that doesn't seem like the best choice for LTE, which grants customers tremendous speeds and thus it would be easier for data hogs to corrupts speeds for the large majority of users. 

This seems like the main reason behind Ovum's conclusion that many carriers failed to capitalize on the opportunity of new data models for 4G LTE:

“LTE provides operators with the opportunity to experiment with new and innovative pricing models, which allows them to find the best way of deriving revenues from the premium service. However, most operators have not grasped this opportunity. Instead, LTE tariffs in the regions Ovum analysed are dominated by unlimited offerings and large data buckets, which can be problematic,” the analysts said.

Except for tiering data, carriers could also introduce draconian fair usage policies to make sure that they can support the promised speeds. Some carriers, however, like Verizon stateside, but also NTT DoCoMo in Japan, have chosen not to offer unlimited LTE data, while previously the same carriers have offered unlimited 3G packages.

Charging premiums for LTE however is a double-edged sword – data hikes could be acceptable only to a certain level as competition in the sector is strong. How do you relate to Ovum's findings – could tiered data actually be a good thing if it guarantees speed or would you prefer a carrier offering unlimited traffic?

source: Ovum via BGR

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posted on 09 Aug 2011, 07:18 2

1. achilles (Posts: 54; Member since: 27 May 2010)


What about the consumers? Yes business is about making money, but with everything we use is using data, how fair is it to limit consumers access by imposing unreasonable data plans and pricing! We use data to stream music from Google Music, I-Cloud, Pandora, ect. We video call, use YouTube, Netflix, Hulu. We even do our banking online. Yet, some carriers are telling us "Only a small percentage of people use 2gb of data per month". Why did Verizon and AT&T take away unlimited data for 29.99 and give us 2gb for 29.99? How is that pricing saving the consumer money? When people say, just use Wifi, I say that Wifi is not everywhere I go! This pricing is moving in a direction that only the super rich will be able to actually use their phones. All consumers are not in the top 5% earners. If we want to watch Netflix, why cant we watch more than 2 movies per month without going over our data limit? Just because you may not watch movies doesnt mean I want to be limited by your use standards. The bottom line: Consumers dont want to pay more money per month for limited access to data. Stop minimizing the amount of data people use, while increasing pricing which ensures most people will go over the limit, giving up more money to businesses. Make your money but at least give us some Vaseline!

posted on 09 Aug 2011, 07:34

2. DigitalMD2 (unregistered)


Why not just charge $10,000 per month per phone. There problem solved!!
Whoever wrote the original article must be a product of 21st century college where they learn to party but not how to do predictive analysis.

posted on 09 Aug 2011, 07:36 1

3. mrcrusha829 (unregistered)


Another thing to consider is that if the pricing plan is not placed right for tiered data then the company could possibly lose that customer to another carrier that either has better pricing for tiered data or has unlimited data. Especially in this economy.... uping prices could have a negative effect... not everyone drives a Porsche!!

posted on 09 Aug 2011, 09:09

11. dandirk (Posts: 187; Member since: 04 Aug 2011)


That is exactly how the carriers got into the "unlimited" mess. They all started with tiered data back when the connection was slow and networks were fairly new.

Competition drove the carriers to start playing advertising games ultimately escalating to "unlimited" service just like in many other services (Web Hosting, Cable/DSL service etc). They hit the advertising wall..can't get better then unlimited:)

Honestly we will probably see "unlimited" again, just will probably take longer then it did before.

posted on 09 Aug 2011, 07:40

4. DigitalMD2 (unregistered)


How about this, carriers should stop subsidizing advertising that masquerades as blogs, reviews and magazines and pass the savings on to the consumer. And stop charging the consumer per data byte for force feeding us more advertising.

posted on 09 Aug 2011, 07:55 4

5. Dlang1234 (unregistered)


I have an idea.. if you want to charge me 29.99 for 2Gbs of data then:

a) I can do whatever I want with that data.. tether, stream whatever
b) it is my 2GB of data, make it rollover, or make it so that I have something like 90 days to use 2GB, if I don't use it all by then, then you charge me again.
c) the next 2GB of data also costs 29.99, buy it in buckets.

posted on 09 Aug 2011, 08:34

8. bubba78 (Posts: 54; Member since: 23 May 2011)


I like this idea!!

posted on 09 Aug 2011, 09:17 2

12. dandirk (Posts: 187; Member since: 04 Aug 2011)


I strongly support A...

b) Not sure about this... maybe a 1 month rollover just to cover accidental overage would be ok but any more and the company would loose money as people used their "saved" data and at the same time have to up max capacity to deal with the possible raise in average usage.

c) Some carriers already do this... Verizon I know charges $10/1GB which is cheaper then the plan. I am amazed they did this, it is VERY reasonable, instead of gouging on overages like in the past.

posted on 09 Aug 2011, 08:03 1

6. DigitalMD2 (unregistered)


AT&T quarterly profits last quarter US$3.59 billion ........... oh yeah, they really missed the boat, so sad. Maybe they can beg the consumers to contibute another $10 each to their cause.

posted on 09 Aug 2011, 08:05 1

7. idaman12000 (Posts: 39; Member since: 03 May 2011)


Thankfully i have unlimited data

posted on 09 Aug 2011, 12:41

17. PeterIfromsweden (Posts: 1230; Member since: 03 Aug 2011)


Me too, over here in sweden : )

posted on 09 Aug 2011, 08:45

9. corps1089 (Posts: 492; Member since: 20 Jan 2010)


once again the markets will provide the answer between supply and demand. If too many carriers start limiting data via tiered plans and throttling, then other carriers will step with unlimited data and gain marketshare. The individual consumer will decide what is the best product for them, unless government regulators step in and ruin everything...

posted on 09 Aug 2011, 09:19 1

13. dandirk (Posts: 187; Member since: 04 Aug 2011)


With only 4 major companies (soon to be 3)... We did NOT see this. Remember AT&T was tiered for almost a year before Verizon. If Verizon saw any advantage to keeping unlimited they would have.

But They DIDN'T.

Honestly with the average usage 500mb and current limits of 2G for the same prices as "unlimited" people are starting to calm down and no care.

Now if they started raising the price then maybe you would see a change.

posted on 09 Aug 2011, 09:44

15. corps1089 (Posts: 492; Member since: 20 Jan 2010)


In the US with 4 major carriers, we will see a shift in the market to Sprint as they remain the only carrier with true unlimited plans.
It will not happen overnight, but it will happen if the market conditions remain the same.
The simple prediction given variables [like network capacity] remain the same is that Sprint's network will become saturated with customers and then some will leave for other carriers with throttleing and tiered plans where the network is not so utilized.
Of course the actual market is much more complex and variables to not remain the same, but that is the general idea...

posted on 09 Aug 2011, 09:47

16. corps1089 (Posts: 492; Member since: 20 Jan 2010)


With Verizon just going up on tiered plans, you can hardly say that there has been enough time to see the shift in subscribers yet.
The iPhone was a variable that kept subscribers at ATT long past the tipping point. As soon as Verizon got the iPhone, the balance shifted [mitigated by other changes in variables such as ATT's price drop on iPhone models].

posted on 09 Aug 2011, 08:55

10. PotDragon (banned) (Posts: 214; Member since: 22 Jul 2011)


Truth is...

The big carriers all have their own bean counters. If there were a way to squeeze another drop of revenue, they most certainly would. My first ANALOG cell phone had charges for calls by the minute...incoming & outgoing. Sigh. Pricing such as 'family share' , 'unlimited calling', 'unlimited texts', ' mobile to mobile calls', ect , are all in response to market pressure & competition. Not in any consideration of the consumer.

If they could figure a way to charge you .05¢ everytime your screen lit up without losing customers...they would. Certainly the "plan" is to get us hooked on 4g...then raise pricing.

Same way you market crack.

posted on 09 Aug 2011, 09:25

14. dandirk (Posts: 187; Member since: 04 Aug 2011)


They could have gotten a premium for a while... but only a short while. Tech like this is upgraded all the time. Customers expect to be transitioned to better service for the same price.

In physical markets, prices DROP the older the tech is, as the economy of scale kicks in and the product is cheaper to make. The new stuff is roughly the same price as the old used to be when "new" (ignoring inflation obviously).

Its the same principal... instead of offering a cheaper price option for older speeds, they just upgrade to newer speeds and charge the same price.

This has been happening for YEARS with cable/DSL service. I have been paying the same $50 per mo but have been getting faster and faster speeds instead of economy of scale price reductions.

posted on 09 Aug 2011, 13:54

18. Univice (Posts: 22; Member since: 15 Jun 2010)


My take: 1) Quit bundling crap together. This makes people pay for things they don't want; 2) Put a metered pricing structure in place. So customers only pay for what they use; 3) Make the metered cost/Mb fair. No one wants to pay $10 in data rates to watch a movie, or pay for phone minutes they don't use.

posted on 09 Aug 2011, 17:17

19. remixfa (Posts: 13950; Member since: 19 Dec 2008)


wait. they should charge MORE? You dont think 60 bux for 5 gigs of data is enough? lol.

How about a home use plan like unlimited for 70, for those of us that cant get fiber optic or cable but are in an LTE area.. (yea that does exist)

posted on 09 Aug 2011, 19:08

20. The_Miz (Posts: 1496; Member since: 06 Apr 2011)


They wouldn't have to worry about this if those damn data hungry Android phones would stop consuming so much data.

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