“It is just a matter of time before telcos around the world stop offering unlimited data plans.” That was the introduction to a joint press release from Amdocs and Heavy Reading received today, but The Insider is not convinced it will actually be the case, and there are plenty of reasons to support his case.
The release stated that the recent rise in new data price plans is being driven by the need for service providers to offer customers an improved data experience and to better monetize their investments in network capacity. Yes, that’s certainly the theory, but do the two go hand in hand? The crux of the press release was primarily supporting the need for better integrated charging and policy management capabilities by service providers to create, offer and monetize the next generation of data services, but this does not mean that unlimited plans will be going away completely any time soon.
Anyone following the remarkable series of recent announcements by US operator, Sprint, will agree. As if to throw caution to the wind, Sprint management is promoting unlimited data plans in conjunction with the long-awaited introduction of the iPhone 4S to its stable. Sounds familiar, doesn’t it? AT&T did exactly the same over four years ago when it launched the original iPhone, only to rescind its generous offer after the load stress was felt across its network.
If the stories are true that Sprint has committed to orders of 30 million iPhones from Apple over the next four years then they really will have to have a unique and attractive offer to make the numbers. When you consider that they currently have 33 million subscribers they are either banking on converting the bulk to the iPhone or attracting a swag of competitor’s customers. And the best way to do this is by offering the one thing the others don’t – unlimited, all-you-can-eat plans, complete with a commitment that consumers that choose its unlimited data plans won't have to worry about throttling or surprises on their monthly bill due to data overage charges that may occur with tiered data plans from other carriers.
Consider, also, that many AT&T and Verizon Wireless customers nearing the end of their existing contracts and wanting to upgrade to the 4S may just see the Sprint offering as the answer to their dreams – a new iPhone and unlimited data. It doesn’t get much better than that. The early signs are good with over one million pre-orders for the new iPhone were received in the first 24 hours across all US channels!
It’s not that there is anything inherently wrong with offering unlimited plans on mobile networks, and it is more about the pricing and management of the plans that can make them good money-spinners. If the surveys are true, then it is a very small percentage of users that abuse reasonable usage thresholds and if these can be recognized and dealt with, usually by terms and conditions surrounding the plans, then one problem can be eliminated. The second issue is the determination of price. It has to be attractive enough to bring in the customers but also high enough to increase ARPU and be profitable. Smart operators employ very smart people to work these things out and if they get it right not only will Sprint see a massive jolt in customer numbers, it may well see a corresponding improvement in its bottom line, in due course. Assuming high subsidy levels for the iPhone, this is a necessity for long-term growth.
Whichever way you wish to view the pros and cons of unlimited data plans, there is no question that customers prefer them. They will be used as a competitive tool as often as they need to be and, if developed and managed properly, can be a market-winning option. For Sprint, it may be a bold move but, as the old adage goes, fortune favors the bold.
Posted
10-12-2011 5:14 AM
by
The Insider