Opinion: Making money from mobile data overages is unsustainable

Asavie

By Liz Edwards, Product Marketing Manager, Asavie

Mobile network operators (MNOs) live with the challenge of doing business in a fast-moving sector where constant change makes business models difficult to sustain.

Just when they have settled into something that sells, a disruptive technology threatens to unseat it.

The temptation for telcos is to sweat a service as long they can, squeezing as much money out of it before the better solution takes hold.

This often means sticking with a tried-and-tested approach rather than introducing something new and better that might cannibalise sales.

How telcos resisted the move from traditional time-division multiplexing voice to session initiation protocol is a classic example of protecting a revenue stream instead of giving customers a better service.

Something similar is happening with MNOs and their reliance on revenue from mobile data.

The most telling part of this is that they add a whopping per-gigabyte surcharge when customers go over their download limit.

You have to think that a model is broken if you’re looking for revenue from customers for overusing your service.

It’s no secret that mobile data is a cash cow, the gift that keeps on giving as revenues from voice and text messages decline.

But charging a premium for every gigabyte over the tariff ceiling is likely to put customers off using data rather than doing more with it.

To be fair, some operators have made efforts to address the problem.

The easy pitch is that customers are on the wrong package, and if there are regular overages it’s time to upgrade.

This may well encourage some to increase their spend, but many others will likely stick with what they have and look to reduce data usage.

Some MNOs simply take the hit with customers and write off overages as a bad debt.

Better for the customer, certainly, but it’s an expedient and reactive measure, not a proactive attempt to do things better.

A more progressive but still imperfect solution has seen operators throttle back connection speeds when users near their data limits.

The problem here is that it diminishes service quality with kilobit connections that make mobile data a bad experience.

Once again, it’s a negative rather than positive approach.

At a time when the proliferation of smart phones and tablets is driving demand for mobile data, with Ovum predicting mobile video will account for 75 per cent of 4G traffic by 2020, the smarter strategy is to turn organisations on to managing their data usage more intelligently rather than turning them off using it.

Or worse, driving them to an increasing number of WiFi networks that offer an alternative service.

Get Closer to Customers

What MNOs really need to do is find ways of getting closer to customers, reducing churn and building loyalty instead of driving them away with bill shock.

They need to help them manage their mobile data, not penalise them for overuse.

One way is to work more closely with customers who want to use mobile device management (MDM) and enterprise mobility management solutions, although these tools typically bring little more than a “turn it on or off” approach to consuming data.

There are other “MDM lite” choices, giving organisations the ability to control data on a user-by-user basis, setting usage policies, matching roles to requirements, monitoring who uses what, when and how.

This can help MNOs get more engaged with customers.

They can keep their customers satisfied and generate extra revenue at the same time.

The grim alternative is a case of déjà vu.

How many times have we seen MNOs work hard to protect revenue streams only to see them diminish?

In the early days of mass-market consumer VoIP like Skype, some tried unsuccessfully to block third-party services that used their networks.

The same happened with over-the-top messaging like WhatsApp. It didn’t work.

Constantly on the back foot, fighting to protect existing revenue is not the best way to build sustainable business models in a notoriously fast-moving industry.

MNOs should not miss the opportunity to wrap their mobile data services in solutions that will drive more usage not less, thereby building closer relationships with customers, reducing churn, and forging partnerships based on long-term revenue.

 

More Features

How Telefónica is rebuilding its network around customer experience How Telefónica is rebuilding its network around customer experience Telefónica has revealed its new artificial intelligence-based approach to customer service is a way of moving beyond traditional KPIs to better reflect user experience. More detail
Orange builds on telecoms presence with new ‘user-centric’ services Orange builds on telecoms presence with new ‘user-centric’ services Orange CEO Stéphane Richard took to the stage at yesterday's Hello show to try and underline more than ever that the telco was looking beyond telecoms in its ambition to provide services as a digital,... More detail
Q&A: ngena Managing Director Marcus Hacke Q&A: ngena Managing Director Marcus Hacke The Next Generation Enterprise Network Alliance (ngena) – founded by CenturyLink, Deutsche Telekom, Reliance Jio and SK Telecom – launched at Mobile World Congress 2016. Managing Director Marcus H... More detail
Q&A: Telefónica Chief Data Officer Chema Alonso Q&A: Telefónica Chief Data Officer Chema Alonso Chema Alonso discusses Aura, a digital assistant that uses cognitive intelligence it has developed with Microsoft, that Telefónica unveiled at Mobile World Congress More detail
    

@eurocomms

Other Categories in Features