Guidebook: Packaging LTE Speed to Drive Revenue -Top Use Cases and Operator Examples

Packaging LTE Speed to Drive Revenue: Top Use Cases and Operator Examples

2 Packaging LTE Speed to Drive Revenue: Top Use Cases and Operator Examples

Whilst LTE is spreading across the globe, the question remains how to best leverage the speed and capacity that LTE brings to create value for customers and generate more revenue. Today we count 222 commercial LTE operators in 83 countries (GSA Evolution to LTE report: October 17, 2013). Some operators like 3 UK intend to launch LTE at no extra cost to customers, whereas others are charging a premium for LTE speeds. In any case, most operators are leveraging LTE speed to promote and add value to their services.

This guide looks at how different operators are packaging LTE speeds to differentiate and drive revenue, showing real-life examples and innovative approaches. Use cases and operator examples include:

• Unlimited data with speed tiers

• Data roaming speed packaging

• Using speed caps to differentiate

• Upselling high speed

• Time of the day speed

• Venue speed boost and throttling

• Strategies to enforce data limits

This guide also discusses the role of policy management in enabling these business models as well as the role of on-device customer engagement in driving loyalty and revenue.

Data source: Mobile Evolution Roadmap, Wireless Intelligence, 2009

Introduction

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Top Use Cases and Operator Examples


Tiered pricing was used on 3G as a smart way to manage capacity and package value by creating differentiated propositions, usually based on varying data volumes. Tiered pricing enables operators to capture more revenue from customers ready to pay for premium services and still generate revenue from (and retain) those customers with lower requirements. Overall it creates a win-win situation where the right resources are allocated to the right need at the right price.

With LTE, tiered pricing is evolving from volume-based tiers to speed-based tiers with data packages based on varying speed entitlements, but often a combination of both. (see KPN example) More and more operators are using this approach to package speed as the main promoted value of LTE. It enables them to create differentiated packages where speed is used to create perceptible value – and encourage customers to upgrade to higher tiers and 3G customers to switch to LTE for a premium. A recent survey* showed that almost 90% of operators are offering or wish to offer speed tiers but not all currently have the capability to do so.

Implementing speed-base packages requires policy control and different LTE operators have taken interesting approaches as highlighted in this guidebook.

* Openet research report - Charging & Billing for the Digital Economy, 2013

Tiered Pricing and LTE Speed

http://www.openet.com/chargingresearch


There have been a lot of discussions around unlimited data offers, with many analysts arguing that they were unsustainable and that operators needed to create more differentiated and value-based offers. Swisscom has actually been using speed as the differentiating value whilst offering unlimited data on LTE - with its Infinity tariffs launched in July 2012. Based on the fact that the value of speed is easier for customers to grasp than data volumes, this approach gives customers the worry-free “unlimited data” that they like, whilst still differentiating to optimize revenue. As a result, Swisscom has seen its overall ARPU grow, although it initially declined its market share is increasingly growing.

source: Swisscom Presentation HY 2013, 07.08.2013

Unlimited Data with Speed Tiers...

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this to its customers and shows for each tariff the full speed data volume in addition to the maximum download and upload speeds. However, 3 Austria also offers a premium package with unlimited and unthrottled data speed.

3 Austria follows the same strategy as Swisscom with its Hello and Hello Europe tariffs that include unlimited data with differentiated speeds and mobile TV channels. However, whilst offering unlimited data, both Swisscom and 3 Austria restrict the speed to 64Kbit/s once a certain amount of data is consumed; 3 Austria clearly highlights

… and Speed Throttling


In terms of roaming, T-Mobile US offers unlimited data while roaming as part of its Simple Choice plans; however the speed is limited to 128Kbit/s , the aim being to upsell “speed packs” when higher speed is required. The plans are subject to fair usage rules and also include unlimited SMS while roaming. This approach is very attractive to customers whilst enabling the company to continue to drive roaming revenues by upselling speed.

This may be an interesting approach in the context of Europe where the abolition of roaming charges through regulation is under discussion.

Temporary speed boost offers may also bring additional revenue from travelers by allowing them to quickly download movies or games to enjoy during their trips.

Unlimited Data Roaming at Low Speed - with High Speed Upsell

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Upselling High Speed Add-Ons In a recent survey*, about half of operators saw add-ons as an effective strategy to increase ARPU. LTE has brought the opportunity for operators to upsell high-speed add-ons to supplement a base package or temporary speed boosts, enabling customers to purchase higher speeds as required. For example, A1 Telekom Austria upsells high speed options to its customers in addition to basic packages that incorporate lower speeds.

Another example is Pelephone in Israel who has been upselling a “double speed” add-on (2-4 Euros, free for half a year); this has resulted in a 80% take up, with 30-50% of the customers expected to stay after the promotional period (Source: Mr. Gil Sharon, CEO & President, 2012, November, Broadband Traffic Management)

Upselling Time of Day Speed & Unlimited Data A1Telekom Austria offers a data add-on (Eur 8.25) to its business customers, with night time access (22:00-08:00) to unlimited data, at full speed as per their base package. This is an interesting approach to managing speed and network resources whilst offering the always popular “unlimited” to create a new data revenue stream.


Upselling High Speed



Speed Cap for Non-Premium Customers EE, the first LTE operator in the UK applies a speed cap of 30mbps to all new customers not on its premium post-pay package “4GEE Extra” while premium customers can enjoy speeds of up to 150 mbps. Their packages also include unlimited minutes and texts as well as free roaming calls and texts to selected countries and includes the Deezer music service.

Speed Cap to Enhance the Value of Post-paid Telia, the world’s first LTE operator offers its 4G post-paid “Mobil Komplett” customers a speed up to 100 Mbit/s whilst all its 4G pre-paid customers are capped to 20 Mbit/s. Telia’s Mobil Komplett plan also comes with data volume tiers and shared data allowing customers to use up to 7 mobile/tablets on the same subscription. The plan includes unlimited calls, SMS and MMS.

Speed Cap to Differentiate with a Sub-Brand Orange France launched its low cost sub-brand Sosh which uses speed caps to differentiate from the main brand. Whilst Orange customers can enjoy LTE speeds up to 150 Mbit/s, Sosh offers a maximum of 42Mbit/s with its best package.

Using Speed Caps to Differentiate

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Operators can use venue throttling to ensure consistent data experience for all or a subset of mobile subscribers in a particular location. It allows operators to throttle up or down subscribers’ speeds at a specific site, based on their existing profile. Using location based network probes the operator can anticipate data congestion and either throttle or boost subscribers’ data speed, based on network utilization.

Venue throttling is relevant in the context of large scale events where a network operator may have over 50,000 subscribers in one area, potentially leading to a poor data experience for all if not managed appropriately.

Diagram: Solution Architecture for Venue Speed Boost and Throttling

Venue Speed Boost and Throttling


When it comes to enforcing data limits, the question is to strike the right balance between customer experience and revenue generation goals; different operators have adopted different approaches:

T-Mobile US for instance offers high speed data volume tiers with its “Simple Choice” plans and then throttles to 2G data speed once the high speed data allowance is exceeded, until the next billing cycle. In effect, this approach is equivalent to offering unlimited data to customers at differing speeds. Orange France also throttles the speed when the data allowance is exceeded. Optus in Canada automatically moves customers to the next tier for the rest of the month. AT&T sends data usage alerts to its customers and then charges when they go over their allowance. Vodafone UK also applies extra charges.

A recent survey (Strategy Analytics Mobile Phone Owner Survey, UK results, Aug 2012) showed that half of UK mobile phone users would like to receive notification before they reach their limits. Operators can also then take the opportunity to upsell a data package. By doing so, one operator revealed that they achieved a 20% sales conversion. This is also the approach that EE UK has taken.

EE approach to enforcing data limits:

Enforcing Data Limits: Throttle or Not... Or Notify & Upsell?

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Customers crave choice, flexibility and control – providing them these three things is the best way to keep them loyal and happy to spend. In terms of choice however, there is always a risk that with too many offers and options available, customers may in fact get confused. Operators can avoid this and actually increase sales conversion rates by bringing customers more relevant choices with context-aware offers sent directly to their devices in real-time. The context can relate to personal, usage, time or location information. An example could be a smartphone user with no data plan trying to access Facebook, this could then trigger in real time a data bundle offer that provides unlimited access to Facebook for €5 a month.

Further giving customers the flexibility to “buy now” on the device and have the service delivered in real-time anywhere is viewed by 74% of operators as the most successful strategy to build loyalty and increase ARPU*. Such level of customer engagement combined with real-time usage visibility right on the device – through dashboards and alerts - creates unprecedented customer satisfaction, driving loyalty and spend.

This requires the extension of PCC to the device, using a secure interaction gateway between the policy & charging control network elements and an application on the device.

My Plan

Up-sellNotification

Purchase


EE approach to enforcing data limits:

The Role of On-device Interaction and Purchase: Driving Loyalty and Spend



Openet’s speed tier solution allows operators to successfully segment their market to differentiate the service experience and increase data revenues. The solution is based on entitlements set within the Subscriber Profile Repository (SPR) which forms part of Openet’s market leading Policy Manager product. When a subscriber begins a data session it triggers a message to Openet Policy Manager. Policy Manager reviews the SPR for the customer’s entitlements. Openet Policy Manager enforces the rules through the Enforcement Point (a network packet gateway or deep packet inspection node).

SPR

The Role of Policy Control: Openet Speed Tier

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Since the introduction of mobile data services in 1998, Openet has helped service providers capitalize on opportunities and overcome challenges. With competitive pressure accelerating, today’s service providers rely on Openet software to evolve business models around networking smartphones, M2M devices and third party services. Openet’s portfolio combines policy and charging control with device and third party interaction to enable innovative charging models, to control operating cost and to personalize services. More than 80 of the world’s largest service providers across over 30 countries use Openet’s high performance software.

Openet has helped operators worldwide take advantage of growth opportunities by evolving legacy platforms to provide a flexible, real-time charging/OCS capability integrated with policy control (PCC).

For more information, please visit www.openet.com.

For more information, please visit www.openet.com

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Guidebook: Packaging LTE Speed to Drive Revenue -Top Use Cases and Operator Examples