Reader Forum: Personalized service plans hold key to solving the “data crunch” in the race for mobile broadband

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Recent news from AT&T Mobility that it plans to reduce the data usage cap and price on its mandatory smartphone data packages, as well as T-Mobile’s announced changes to its WebConnect wireless data offering across its Even More and Even More Plus rate plans, has placed a bright spotlight on the network-congestion challenges that communication service providers face with uncapped data plans, bandwidth-hungry apps and services, and new mobile devices that lend themselves to graphics- and video-intensive use.
The story is not new. The industry has known for some time that the “data crunch” would take its toll on the CSPs’ networks. These announcements are merely the latest evidence that the problem is now very real.
Migrating to 4G mobile broadband, increasing network capacity (and therefore capex), instituting data capping, and optimizing apps and services are just are few of the “solutions” that have been discussed to address increasingly growing network congestion.
While CSPs will entertain each of these solutions and implement them to varying degrees, a better remedy may be tighter control of the network that they already have that incorporates a combination of 1) bandwidth management, 2) real-time charging and policy, and 3) better correlation between the data volume allocations that are offered to customers and the corresponding return on investment to the service provider.
In the U.S., CSPs must consider a move to real-time, personalized service offerings that are achieved through bandwidth management, policy management, and greater control by customers over their plan. Hyper-growth, hyper-competitive markets such as India have taught us that the key to higher customer satisfaction and retention is enabling subscribers to have greater flexibility over how they use their service.
Today’s legacy CSP billing models where customers have very limited or no real-time, interactive view of their service plan creates – at best – a lost brand-building opportunity or – at worst – a negative customer experience when unexpected charges occur.
Regarding flexibility, more and more prepaid users desire sophisticated bundling and service options. Conversely, many postpaid users want more real-time flexibility and control. Both types of customers often work in the same office or live in the same household. CSPs can drive new revenue streams from differentiated services that will appeal to both customer types.
Effective bandwidth management with real-time charging and policy enables CSPs to customize services depending on different market and customer needs through differentiated, dynamic tiered plans. CSPs can offer highly targeted policies for these plans based on the customer’s network access, time of day, equipment type, network congestion status, or a combination of multiple criteria.
CSPs can boost revenues through plan specialization, targeting exactly what customers require, while managing bandwidth consumption, and simultaneously ensuring a competitive and differentiated service in very competitive markets. In addition, future capex costs can be reduced as bandwidth usage is optimized. Bandwidth management should help ensure that subscribers get the quality of service levels that they require for bandwidth-sensitive applications, such as video streaming, IPTV, and high-quality VoIP and IP Conferencing.
Back to AT&T Mobility’s announcement, according to Ralph de la Vega, CEO of AT&T Mobility and Consumer Markets, “Some customers, up until now, have been hesitant to sign up for a $30 monthly data plan” for unlimited access. Current customers can switch to the new pricing or keep their current all-you-can-eat service. The net effect is that AT&T expects the new pricing will increase sales.
One of the key elements of AT&T’s adjusted services is that customers will receive text alerts when they near their usage limits, enabled by real-time charging and policy. These types of alerts offer customers the ability to choose whether they curtail their usage or purchase additional capacity. Again, this is the first step toward personalized service.
Besides driving a stronger customer experience, it is critical that service providers get better control of their network so that they can start to negotiate with content providers (e.g. Amazon, Apple, Google, Microsoft, Yahoo, etc.) for premium network access for their apps and services. These negotiations are how service providers avoid becoming the proverbial “dumb pipe” and insert themselves into the value chain with the end user.
In this way, bandwidth management ensures increased profitability as CSPs evolve to a “two-sided business model” to maximize revenue by personalizing bandwidth offers, enabling real-time usage updates, and creating innovative offers where bandwidth is bundled with a service offer. For example, a branded on-demand video service download could be outside the usage cap, thereby creating incentives for third parties to partner with CSPs.
In other words, instead of looking at Apple, Google, and Yahoo, and saying, “how do I get those app dollars?” CSPs should concentrate on helping the content providers optimally deliver their applications and content, and resolve to revenue-share with them. By optimizing their networks to ideally run specific applications, service providers could demonstrate value to their subscribers by improving the delivery and overall experience with an application. Customers would begin to see how an app may perform better on one network versus another.
As service providers look to lessen pressure on increasingly overloaded networks and extract increased revenue streams from their data services, next-generation bandwidth management helps handle the increase in subscriber and data traffic through a standards-compliant, converged real-time charging and policy mechanism that integrates with existing networks to define and enforce bandwidth- and charging related rules for each customer.
Ultimately, CSPs need to position their data services to deliver a range of applications with a consistent customer experience. Customers will gain the benefits of only paying for the service they need, while CSPs can manage their network expenditures more effectively and in line with the value delivered to their customers as they compete to win more customers in the race for mobile broadband.