Dynamic Pricing and Impact of Simple and Easy to Understand Data Plans in Driving Mobile Data Revenues

Dynamic Pricing and Impact of Simple and Easy to Understand Data Plans in Driving Mobile Data Revenues Image Credit: Ericsson

According to Ajay Gupta, Vice President and Head of Strategy and Marketing, Ericsson India, subscribers who know their plans well consume twice as much data compared to users who do not understand their plans. As subscribers continue to be inundated with the wide variety of 'service mix' - ie, the combination of devices, quotas, access rules/policies, tariffs, penalties, rollover rules, data sponsorship, etc - it is hardly surprising that a sound understanding of their plans is key in encouraging subscribers to consume more data. Fear of overages and ensuing bill shocks have stood in the way of many people in using a healthy amount of data including those who turn off their phones once they step outside the Wi-Fi zone, or those who exit an interesting video mid-way and those who turn off data as soon as their roaming plan is activated. 

Ajay was commenting on Ericsson's recently released report titled “The Changing Mobile Broadband Landscape” which takes a detailed look at the consumption of mobile data services in India, which boasts a population of more than 1.2 billion. Being part of a rapidly developing league of countries which comprises China, Brazil and Russia, otherwise known as BRIC, India represents the steady shift of economic power from the developed nations to the developing states. The adoption of mobile communications across its people and the increasing use of mobile data services to power commerce and financial transactions hence becomes a catalyst in this shift, onboarding a huge chunk of the population to services critical in providing access to products and services necessary in improving overall living standards.

Clarity and understandibility of service plans and hence the agreements signed on by consumers play a significant role in boosting consumption of mobile data in regions such as India. Unlike traditional voice and messaging, it is difficult for any user to estimate the charges he or she will be paying for a session of usage, especially given the variety of content and applications they access throughout the course of the day. Some apps are turned on as soon as the device is switched on, and they continue to run in the background, sending and receiving bytes of data without users being aware of this - and even if users do, standard videos, HD videos, audio files, image uploads, sticker sharing, messaging and a myriad of other content consume varying amounts of bandwidth, and varying further by time of the day, by plan and by source/content provider, making it impossible for users to keep tab on their usage and hence, spending.

Simplicity of plans, and clear communications of what the rates, policies and features entail will therefore play an important role if Mobile Operators were to increase their market share in markets such as India, where price elasticity for mobile data is very high given the high degree of cost consciousness among the middle and lower income groups. Ericsson's report showed that the use of mobile internet among the lower socio-economic segment in India increased from 38% in 2013 to 45% in 2015. The report also noted that the usage of smartphones in India's urban areas reached 60%, while in mid-size and smaller cities, the figure stands at 33%, compared to 27% in big non-metros and large cities. 

As data continues to spew more services including the latest line up of communication services  covering VoLTE, ViLTE, RCS, VoWiFi and LTE Multicast, simplicity of plans becomes even more paramount in creating confidence among users. These services carry separate tariffs and bring different usage policies for the users, and introducing more users to these newer services means that plan details must be made easy to understand and easy to apply. Joining this array of new services are the digital content services including OTT Video and OTT TV, which are also offered on separate charging schemes. OTT TV channels for example can be charged on daily or monthly access which carries a flat fee regardless of the bytes consumed - a concept completely new to most data subscribers. On services such as video which is one of the fastest growing verticals within mobile data, for example in India where 70% of mobile broadband smartphone users regularly stream videos on their smartphones, clarity on how video content is charged and counted against their mobile data becomes a key factor in motivating more consumers to try out premium video services delivered on their mobile devices.

The report hence signals an important message to Mobile Operators. It showed that only 10% of mobile internet users feel they understand their plan perfectly - among the Indian mobile data users. The figures may not differ much in other markets - both developed and developing - due to the continuous changes in plans and their features, the new services being bundled as part of mobile data packages and the rollout of innovative concepts including sponsored content, data rollover, data sharing and loyalty rewards - all of which lead to 'if this than that' type of dynamic pricing that leaves many users unsure of what they will actually be billed for at the end of their bill cycle. Simple plans may hence go a long way, not just in boosting mobile data usage, but also in ensuring the success of Mobile Operators' newer offers - from OTT TV to VoLTE to Chat Apps and everything else targeted for the retail customer.

Ajay Gupta, Vice President and Head of Strategy and Marketing, Ericsson India
The internet is finally coming of age and is empowering cross sections of Indian society. Though the most used smartphone services in India are for social networking and instant messaging, the usage of banking, e-commerce, navigation and cloud storage apps and services is increasing. It is for this reason we are seeing uptake and digital transformation of many industries like retail, transportation, and banking.

Executive Editor of The Fast Mode | 5G | IoT/M2M | Telecom Strategy | Mobile Data Innovations 

Tara Neal covers stories on strategies and initiatives in the Digital Telco space, and anchors the 5G and IoT/M2M verticals on the publication. Tara holds a First Class Honours in BSc Accounting and Finance from The London School of Economics, UK and is a CFA charterholder from the CFA Institute, United States. Tara has over 20 years experience in technology and business strategy.

Follow her on Twitter @taraneal11, LinkedIn @taraneal11, Facebook or email her at tara.neal@thefastmode.com.

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