Reader Forum: Latent consumer demand for 4G

Editor’s Note: Welcome to our weekly Reader Forum section. In an attempt to broaden our interaction with our readers we have created this forum for those with something meaningful to say to the wireless industry. We want to keep this as open as possible, but maintain some editorial control so as to keep it free of commercials or attacks. Please send along submissions for this section to our editors at:dmeyer@ardenmedia.comortford@ardenmedia.com.
What do consumers think about using 4G networks? Would they be prepared to pay more for a new device, accept higher charges for faster services and will they be more demanding of service quality?
We’ve already established that today’s mobile networks are suffering from data congestion where high traffic levels are significantly affecting the customer experience. Recent research conducted by U.K. analyst firm Telesperience and sponsored by Amdocs found that 63% of service providers admit they already are feeling the impact with 20% admitting a “severe overload” at times.
While attending the 4G World event this year, my team was curious to find out what consumers thought about several aspects of a “4G World” – for example, are they concerned about how data will be priced now that unlimited plans continue to disappear? How many consumers actively plan on getting a 4G device in the next year or so?
We surveyed almost 100 people at the show – attendees are typically early adopters of new technology and include service providers, tech-savvy consumers and equipment vendors – and consolidated the results to extract the most interesting findings:
1. There is strong consumer demand for 4G. Although we are only beginning the journey to 4G, the market is looking attractive – 62% of our respondents indicated that they would be acquiring a 4G device in the next 12 months and are willing to pay more for a 4G data plan. However, 94% of respondents indicated concern with overage charges due to data plans with usage caps. The implication for service providers is clear: they will need to do even more to minimize “bill shock” and ensure a positive customer experience.
2. Consumers are surprisingly open to usage based pricing models. In fact, 82% of respondents indicated that they are open to pricing models that charge on a consumption level. Service providers are already beginning to take steps in this direction (take the new iPad data plans, for example) and new pricing models are sure to emerge. Service providers will need to drive these offers by tightly coupling policy management with charging solutions, along with the ability to personalize a user’s plan based on their usage habits.
3. Consumers recognize that network capacity affects their current mobile data experience. Overwhelmingly, 88% recognise poor service results from capacity issues with their service provider. This speaks volumes for the current customer experience, and should be seen as a concern as more devices are added onto the network each day.
So with customers preparing to move to 4G sooner rather than later and the experience on current networks lacking from a customer perspective, how are service providers looking to deal with the “capacity crunch?”
Bear in mind that AT&T Mobility reported that it had added over 1.1 million connected devices in the third quarter of this year, and this growing trend of Internet connectivity will continue to drastically push wireless networks. Data traffic is growing not only with each new device, but also with the wider range of data applications and consumer acceptance. For example, Telefonica O2 UK stated in a recent video interview that data traffic is doubling on their network every six months. This is not atypical of data traffic growth observed by other service providers.
According to our recent survey of service providers, most network planners are looking to expand the capacity of their networks as their primary strategy. Offloading to Wi-Fi and conserving network resource through usage caps are also considered, but as complementary approaches. Additionally, 97% of network planners said they plan to roll out Ethernet for higher transition speeds and realize that if they do match investment across both cellsites and backhaul, they can create more problems to the customer experience than solutions.
While consumers are very much looking forward to the faster speeds and higher performance of 4G networks, we predict that it will take until about 2013 before there will be wide range of smartphones and similar 4G capable devices. However, that doesn’t mean that there is time to spare – network providers need to ensure they are ready for the sure-fire demand they’ll continue to see.
Interested in hearing more – taken directly from the 4G World show floor? To view a conversation on policy management trends between Yankee Group analyst Susan McNeice and my colleague Guy Hilton, Director of Product Marketing, Revenue Management at Amdocs, please visit this link: Yankee interview on policy management.