A couple of interesting developments in mobile broadband pricing in the UK over the last couple of weeks.
First, 3 increased the bundle on its £15 plan from 5GB to 15GB for anyone taking a 24 month plan. Or you could think of it as reducing the price on its 15GB plan from £30 to £15 for anyone taking a 24 month plan. Either way it's a whopping increase in value for money. 3 is clearly eager (to say the least) to sign up subscribers, particularly on 24 month plans, and seems unconcerned about increasing traffic. This is a risky strategy that could backfire. Clearly having the "cheapest" offer in the market for a virtually unlimited offer is a good place to be, but they need to be sure that the economics stack up. A £15 15GB plan will be very appealing to those high usage early adopters that were signing up in Q4 2007 and are coming round for renewal now.
Elsewhere, T-Mobile has cut the allowance on its Mobile Broadband Extra package from 10GB to 5GB for £25/month (also on 24 month plan). I tend to be a strong advocate of having a big plan available for big users, even if you have to charge a hefty fee for it. Admittedly this is a "fair usage" policy, so don't expect large out-of-bundle charges for heavy users. T-Mobile has looked at its base, looked at the bandwidth economics, and decided that 5GB will in almost all cases provide the required capacity for all but the heaviest users. Even where users stray beyond the 5GB limit, as long as they aren't a serial offender it won't be a problem.
This represents two different approaches to the issue of balancing subscriber acquisition and network economics. What's interesting is that a lot of it stems from the approach taken to out-of-bundle charging. 3 charges high rates, T-Mobile does not charge at all. This issue is explored in depth by my colleague Richard Thurston in a series of pieces he has been writing recently for Analysys Mason's Mobile Broadband research programme including Preventing mobile broadband network overload: strategies for excess usage charges and throttles.
At the same time as reducing the bundle, T-Mobile has allowed access to over-the-top VoIP services such as Skype. An obvious move really as PC-based VoIP never represented much of a threat of cannibalisation of voice services or a risk of network congestion. The question-mark was always over whether the latency was good enough to offer the service.
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What about the very light users? I count myself in this group. All I use mobile broadband for is an occasional bit of email and surfing. I never get anywhere near the download cap. The new(ish)Vodafone PAYG deal whereby you get 1GB, to be used as and when you like, for £15 looks good for people like me. That £15 could keep me going for months. The trouble is, I always seem to get GPRS when I connect to Vodafone. Is there an algorithm that determines the service you get on the basis of the deal you have?
ReplyDeleteAlthough I'm a light, and only occasional, user, I'd be willing to pay something per month for the privilege of a decent rate when I do connect. But £10 and above per month looks like too much for my modest requirements. I think a lot of people are in the same boat.
The occasional, casual, mobile broadband user is not blessed with an excess of choice in the UK market. The Vodafone plan you mention is clearly the best option as the credit lasts for 6 months. All the other plans simply recreate DSL-style pricing with a monthly fee. Even the prepay options from other operators expire after 1 month. The sooner MNOs react to the requirements of occasional users, who will make up the majority, the better.
ReplyDeleteThe idea of paying for better bandwidth is a very interesting one and I'm focusing a lot of attention on differential service provision. There is a lot of work still to be done here and it will pay operators significant dividends to do it. Better segmentation = more targeted offers = better revenue per GB (and happier customers). Critical.
Allan,
ReplyDeleteHS devices will always connect on HS where it exists, and it is in 100% of Vodafone's 3G sites, so if you are getting GPRS you must be outside the 3G footprint. No doubt there is some unpublicised rate adaptation for lower ARPU users, and at the other side of the credit crunch, I agree with Matt's assessment that for every undisclosed 'bronze' subscriber, the operators will want to offer a higher rate 'gold' package. With '3' offering a 15GB package, we're on the cusp of 'unlimited' MBB (that would suffice for >90% of broadband users), then quality/speed really becomes the only metric that operators can differentiate upon.