Leading mobile operators are moving up the value chain by getting creative with their mobile data plans. Focusing more than ever on subscriber satisfaction, they’re offering innovative packages that truly address the spectrum of subscriber needs.
A quick scan reveals that the days of the 1-size-fits-all data plans are over. Competitive forces have motivated operators to address the pain points related to mobile data plans. On an individual basis, operators have been developing data plan strategies to suit their unique markets. Globally, though, patterns are emerging that indicate 6 degrees of mobile data plan innovation—as shown in Figure 1.
The 1st article in this 2-part series focuses on application-based and shared mobile data plans.
APP-BASED Mobile Data PLANS
Application-based plans offer service providers an opportunity to attract subscribers and boost revenue from mobile data. Applications in these plans do not count against the subscriber’s monthly data allowance, removing any worry that these applications will cause data limits to be exceeded. Application-based plans are especially attractive for subscribers who use data-intensive applications, such as mobile video.
Reduce risk of overage fees All that’s required is a small monthly fee, which is sometimes even waived when subscribing to top tier mobile data plans. Subscribers reduce the chance they will have to pay overage fees, trading them off for more stable pricing and the freedom to use their favorite applications as much as they want. And because research shows that pricing remains a sensitive issue, reducing the chance of overage assures customer satisfaction, a better brand image, and higher rates of retention.
Application-based plans are ideal for bandwidth-heavy video and multimedia applications. With compelling applications, operators are able to convert prospects into new subscribers and increase monthly subscriptions. Introductory discounts can accelerate uptake even more.
From Airtel to Turkcell Application-driven mobile data plans have been around for some time. They have been particularly popular in countries where mobile data use is limited. In India, for example, Bharti Airtel, in partnership with Google, launched FreeZone—whose bundled applications included Google+, Google mail and search. Airtel subscribers could use these applications as much as they wanted with no impact on their data bills. They could also visit the first page of a website without being charged. However, if they chose to proceed to another page or to download a video, they would be directed to purchase a data package.
Similarly, Turkcell introduced Facebook®Zero—a free text-only version of Facebook. Turkcell later swapped the free offer with a paid plan, including unlimited Facebook data for a monthly fee. Since then, Turkcell has been offering social media application packages for Facebook and Twitter, among others.
In both cases, application-driven data plans have been especially effective for driving subscribers in emerging markets further up the value chain, after giving them a taste of mobile data for free.
Variations on a theme In more mature mobile data markets, the focus of application-based plans has broadened. Now operators are using application-based plans to:
- Attract data users from other carriers
- Differentiate and add value to carrier offerings to retain subscribers
- Encourage subscribers to adopt higher plans
For example, as part of its portfolio of 4G Red Plans, Vodafone UK includes a minimum half-year subscription to Netflix, Sky Sports Mobile TV or Spotify Premium. Given that these offerings are bandwidth-intensive—in addition to being wildly popular—it’s easy to see how they could draw subscribers from other operators. With no limits on usage, overage charges become a thing of the past.
Also in Western Europe, Vodafone Netherlands is encouraging mobile data uptake. For the first month, its 4G Mobile TV package offers 6 free channels—with no charges against the subscriber’s data plan. Afterwards, subscribers are charged a flat Euro 7.95.
No surprises, please Much of the success of application-based data plans depends on price certainty. This makes it important to offer subscribers clear warnings when data plan boundaries are crossed.
For example, if a subscriber initiates a video stream but the plan only supports web page access, the subscriber should be alerted. This could take the form of an on-screen message and/or include the deactivation of the video streaming link itself. Subscriber satisfaction depends on both the operator and subscriber knowing their limits, and staying within them.
SHARED Mobile DATA PLANS
Just like application-based plans, shared data plans address the subscriber need to control costs. Subscribers like shared data plans because they allow groups of users or devices to share a pool of mobile data. In fact, studies by Strategy Analytics indicate that 60% of smartphone owners want a single shared data plan that can connect multiple devices.
The more, the merrier
Typically, subscribers pay a monthly fee based on the size of the data pool, and an additional monthly fee per connected device.
What’s the attraction? The connection fee is lower than the cost of buying separate data plans per device. That’s important because the ITU projects that 25 percent of mobile consumers will own more than 1 mobile device by 2016. Moreover, subscribers often enjoy voice and messaging bundled with their plan. Taken together, these factors help subscribers overcome their mobile data consumption blockage.
The power of one With shared mobile data plans, simpler billing and account management top the list of subscriber benefits. Subscribers have only 1 account to manage for all devices. And connecting a new device to an existing plan is as easy as adding an additional monthly line charge. Another benefit of shared plans is obvious to subscribers who don’t consume their full monthly data allowance. By adding another device—a tablet, for example—to a shared data plan, subscribers can use data that would otherwise be wasted.
Simply irresistible Shared mobile data plans are also popular among operators. They encourage new and existing subscribers to connect more devices and to upgrade to connected devices—smartphones and 3G- or LTE-enabled tablets. Moreover, as subscribers add more devices and people to their plans, it becomes harder for subscribers to change service providers, thus reducing churn. Here are several other reasons why operators are embracing shared mobile data plans:
- Usage increases as more devices are connected to the same data plan pool. When using a pool, subscribers typically purchase larger data plans.
- Shared data bundled with voice and messaging services helps stem the decline of voice and messaging revenues. This also allows operators to counter “free” over-the-top (OTT) voice and messaging services because these services consume the subscriber’s data allotment, whereas the operator’s own voice and data offerengs do not.
- OPEX shrinks as more devices are attached to each billing relationship.
A win-win for operators and businesses Mobile data is highly valued by consumers so businesses are looking to offer it as a reward to top customers. As shown in Figure 2, the business rewards the consumer with mobile data, according to their loyalty program.
The business decides the amount of data, who can access it, and the duration of the reward. On behalf of the business, the operator manages the data usage. This might include debiting the reward pool or, once exhausted, debiting the consumer’s own monthly data pool. The result: operators can use this win-win scenario to attract the business’s loyal customers to its network.
Who does it well? With 19 of the 25 largest operators. now offering shared mobile data plans, the bar has been set. But who does it well and who is innovating? Here are some of the most notable leaders and innovators:
- Verizon Wireless: Its well-known Share Everything plan includes voice, messaging, and data.
- SK Telecom: LTE Data Gift Program allows customers to gift their extra data to other LTE subscribers.
- China Mobile: With its multi-SIM service, subscribers can designate additional SIM cards to deduct data use from the main SIM card’s data pool for a monthly connection fee.
- China Mobile Hong Kong: Offers the 2cm exchange market platform, which allows 4G Pro customers to set prices and trade data with each other.
Down the road with shared mobile data plans It is still early in the day for shared data plans. The most highly anticipated innovations are expected to center on connecting the Internet of Things (IoT). Consumers are already buying devices that can be connected to the mobile network—phones, tablets, laptops, game systems, and even cars. Most promising among the IoT list are connected cars. Capitalizing on this trend, AT&T lets subscribers add a connected car to a shared data plan for $10 per month.
Competition begets innovation All these application-driven and shared data plan innovations demonstrate operators’ belief that a broad array of mobile data plans is needed to better meet subscriber demands. But the search for competitive advantage doesn’t end here. As we’ll see in part 2 of this series, there remains plenty of room for capacity-based, service-level and 3rd-party payment data plan innovation.
Network analytics: Wireless Network Guardian product page Policy control: Dynamic Services Controller product page Offer orchestration: Smart Plan product page Online charging: SurePay product page Deep packet inspection: Service Router product page
-  “Service Provider Capex, Opex, Revenue, and Subscribers Database Quarterly Worldwide and Regional Database.” Infonetics Research, updated April 7, 2014.
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