Moving Customers to Tiers
“The argument is that you’re introducing a level of granularity that will allow a better fit between consumption and payment”
And mobile providers are facing the same troubles, thanks to devices that facilitate a richer mobile video experience. “If you have all of your users on the best available speeds and
all-you-can-eat data,” said Oisin O’Connor, product marketing manager with Openet, a policy control solutions provider, “ you quickly run into problems once the smart phone penetration rate in your
area runs above 20-30 percent, and in some markets it’s through 50 and heading to 60 percent.”
The major issue here is that bandwidth hogs are no longer a small cadre of tech-savvy super-users being subsidized by everyone else. Now the bandwidth hogs are all around, and it isn’t a
question of if some manner of control is necessary, but rather how to go about instituting these controls.
Caps are one method, but, as Comcast has found out, they can be less-than-ideal. "It’s a very aggressive step to move over to caps from an unlimited world,” said O’Connor. The shift can be
jarring, and can generate a fair amount of blow-back in the form of customer churn or negative PR.
Furthermore, on the mobile side, data caps, says Gordon, don’t fully address the issue. “A data cap doesn’t actually solve the problem of abuse,” noting that many users operating within the
confines of monthly usage limits at the same time can still cause trouble. “It’s about spikes in usage on a particular cell site that mean you can’t serve anyone else.”
So instead of focusing on caps, service providers may be better advised to go straight to some form of service tiering. “As we like to say around the office,” said O’Connor, “It’ll all end in
tiers.”
Granted, moves to tiered pricing aren’t always pleasant. The all-you-can-eat bell pricing can’t be un-rung, and some subscribers will naturally be unhappy with the notion of paying for
something that used to be unmetered. A quick glance at some of the ad campaigns put forth by mobile providers in the U.S. would also reveal the downside of being among the first to try to wean
customers from a habit of unlimited data: other providers will certainly attempt to poach subscribers, though the efforts are clearly short-term solutions.
