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

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Whilst LTE is spreading across the globe, the question remains how to best leverage the speed that LTE brings to create value for customers and generate more revenue. This guide presents recent operators’ innovations in this area, with examples from leading operators including T-Mobile, Orange, Swisscom, Optus, A1 Telekom Austria, 3 and EE.

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

  • 1. Packaging LTESpeed to DriveRevenue:Top Use Cases andOperator Examples

2. IntroductionWhilst LTE is spreading across the globe, the question remains how tobest leverage the speed and capacity that LTE brings to create value forcustomers and generate more revenue. Today we count 222 commercialLTE 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 tocustomers, whereas others are charging a premium for LTE speeds. In anycase, most operators are leveraging LTE speed to promote and add value totheir services.This guide looks at how different operators are packaging LTE speeds todifferentiate and drive revenue, showing real-life examples and innovativeapproaches. 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 limitsThis guide also discusses the role of policy management in enabling thesebusiness models as well as the role of on-device customer engagement indriving loyalty and revenue.Data source: Mobile Evolution Roadmap, Wireless Intelligence, 20092 Packaging LTE Speed to Drive Revenue: Top Use Cases and Operator Examples 3. 3Tiered Pricing and LTE SpeedTiered pricing was used on 3G as a smart way to manage capacity and packagevalue by creating differentiated propositions, usually based on varying datavolumes. Tiered pricing enables operators to capture more revenue fromcustomers ready to pay for premium services and still generate revenue from(and retain) those customers with lower requirements. Overall it creates awin-win situation where the right resources are allocated to the right need atthe right price.With LTE, tiered pricing is evolving from volume-based tiers to speed-basedtiers with data packages based on varying speed entitlements, but oftena combination of both. (see KPN example) More and more operators areusing this approach to package speed as the main promoted value of LTE.It enables them to create differentiated packages where speed is used tocreate perceptible value and encourage customers to upgrade to highertiers 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 speedtiers but not all currently have the capability to do so.Implementing speed-base packages requires policy control and differentLTE operators have taken interesting approaches as highlighted in thisguidebook.Top Use Cases and Operator Examples* Openet research report - Charging & Billing for the Digital Economy, 2013Packaging LTE Speed to Drive Revenue: Top Use Cases and Operator Examples 4. Unlimited Data with Speed Tiers...There have been a lot of discussions around unlimited data offers, with manyanalysts arguing that they were unsustainable and that operators needed tocreate more differentiated and value-based offers. Swisscom has actuallybeen using speed as the differentiating value whilst offering unlimited dataon LTE - with its Infinity tariffs launched in July 2012. Based on the fact thatthe value of speed is easier for customers to grasp than data volumes, thisapproach gives customers the worry-free unlimited data that they like,whilst still differentiating to optimize revenue. As a result, Swisscom hasseen its overall ARPU grow, although it initially declined its market share isincreasingly growing.source: Swisscom Presentation HY 2013, 07.08.20134 Packaging LTE Speed to Drive Revenue: Top Use Cases and Operator Examples 5. 5 and Speed Throttling3 Austria follows the same strategy as Swisscom withits Hello and Hello Europe tariffs that include unlimiteddata with differentiated speeds and mobile TV channels.However, whilst offering unlimited data, both Swisscomand 3 Austria restrict the speed to 64Kbit/s once a certainamount of data is consumed; 3 Austria clearly highlightsthis to its customers and shows for each tariff the full speed data volume inaddition to the maximum download and upload speeds. However, 3 Austriaalso offers a premium package with unlimited and unthrottled data speed.Top Use Cases and Operator ExamplesPackaging LTE Speed to Drive Revenue: Top Use Cases and Operator Examples 6. Unlimited Data Roaming at Low Speed - with High Speed UpsellIn terms of roaming, T-Mobile US offers unlimited data while roaming aspart 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. Theplans are subject to fair usage rules and also include unlimited SMS whileroaming. This approach is very attractive to customers whilst enabling thecompany to continue to drive roaming revenues by upselling speed.This may be an interesting approach in the context of Europe where theabolition of roaming charges through regulation is under discussion.Temporary speed boost offers may also bring additional revenue fromtravelers by allowing them to quickly download movies or games to enjoyduring their trips.6 Packaging LTE Speed to Drive Revenue: Top Use Cases and Operator Examples 7. 7Upselling High Speed Add-OnsIn a recent survey*, about half of operators saw add-ons as an effectivestrategy to increase ARPU. LTE has brought the opportunity for operatorsto upsell high-speed add-ons to supplement a base package or temporaryspeed boosts, enabling customers to purchase higher speeds as required.For example, A1 Telekom Austria upsells high speed options to itscustomers in addition to basic packages that incorporate lower speeds.Another example is Pelephone in Israel who has been upselling a doublespeed add-on (2-4 Euros, free for half a year); this has resulted in a80% take up, with 30-50% of the customers expected to stay afterthe promotional period (Source: Mr. Gil Sharon, CEO & President, 2012,November, Broadband Traffic Management)Upselling Time of Day Speed & Unlimited DataA1Telekom Austria offers a data add-on (Eur 8.25) to its businesscustomers, with night time access (22:00-08:00) to unlimited data, at fullspeed as per their base package. This is an interesting approach to managingspeed and network resources whilst offering the always popular unlimitedto create a new data revenue stream.Top Use Cases and Operator Examples* Openet research report - Charging & Billing for the Digital Economy, 2013Packaging LTE Speed to Drive Revenue: Top Use Cases and Operator ExamplesUpselling High Speed 8. Using Speed Caps to DifferentiateSpeed Cap for Non-Premium CustomersEE, the first LTE operator in the UK applies a speed cap of30mbps to all new customers not on its premium post-paypackage 4GEE Extra while premium customers can enjoyspeeds of up to 150 mbps. Their packages also include unlimitedminutes and texts as well as free roaming calls and texts toselected countries and includes the Deezer music service.Speed Cap to Enhance the Value of Post-paidTelia, the worlds first LTE operator offers its 4Gpost-paid Mobil Komplett customers a speed upto 100 Mbit/s whilst all its 4G pre-paid customers arecapped to 20 Mbit/s. Telias Mobil Komplett plan also comeswith data volume tiers and shared data allowing customersto use up to 7 mobile/tablets on the same subscription. Theplan includes unlimited calls, SMS and MMS.Speed Cap to Differentiate with a Sub-BrandOrange France launched its low cost sub-brand Sosh whichuses speed caps to differentiate from the main brand. WhilstOrange customers can enjoy LTE speeds up to 150 Mbit/s,Sosh offers a maximum of 42Mbit/s with its best package.8 Packaging LTE Speed to Drive Revenue: Top Use Cases and Operator Examples 9. Venue Speed Boost and Throttling9Top Use Cases and Operator ExamplesPackaging LTE Speed to Drive Revenue: Top Use Cases and Operator ExamplesOperators can use venue throttling to ensure consistent data experiencefor all or a subset of mobile subscribers in a particular location. It allowsoperators to throttle up or down subscribers speeds at a specific site, basedon their existing profile. Using location based network probes the operatorcan anticipate data congestion and either throttle or boost subscribers dataspeed, based on network utilization.Venue throttling is relevant in the context of large scale events where anetwork operator may have over 50,000 subscribers in one area, potentiallyleading to a poor data experience for all if not managed appropriately.Diagram: Solution Architecture for Venue Speed Boost and Throttling 10. Enforcing Data Limits: Throttle or Not... Or Notify & Upsell?When it comes to enforcing data limits, the question is to strike the rightbalance 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 itsSimple Choice plans and then throttles to 2G data speed once the highspeed data allowance is exceeded, until the next billing cycle. In effect, thisapproach is equivalent to offering unlimited data to customers at differingspeeds. Orange France also throttles the speed when the data allowance isexceeded. Optus in Canada automatically moves customers to the next tierfor the rest of the month. AT&T sends data usage alerts to its customersand then charges when they go over their allowance. Vodafone UK alsoapplies 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 receivenotification before they reach their limits. Operators can also then takethe opportunity to upsell a data package. By doing so, one operatorrevealed that they achieved a 20% sales conversion. This is also theapproach that EE UK has taken.EE approach to enforcing data limits:10 Packaging LTE Speed to Drive Revenue: Top Use Cases and Operator Examples 11. The Role of On-device Interaction and Purchase: Driving Loyalty and Spend11Customers crave choice, flexibility and control providing them these threethings is the best way to keep them loyal and happy to spend. In terms ofchoice however, there is always a risk that with too many offers and optionsavailable, customers may in fact get confused. Operators can avoid thisand actually increase sales conversion rates by bringing customers morerelevant choices with context-aware offers sent directly to their devicesin real-time. The context can relate to personal, usage, time or locationinformation. An example could be a smartphone user with no data plantrying to access Facebook, this could then trigger in real time a data bundleoffer that provides unlimited access to Facebook for 5 a month.Further giving customers the flexibility to buy now on the device and havethe service delivered in real-time anywhere is viewed by 74% of operatorsas the most successful strategy to build loyalty and increase ARPU*. Suchlevel of customer engagement combined with real-time usage visibility righton the device through dashboards and alerts - creates unprecedentedcustomer satisfaction, driving loyalty and spend.This requires the extension of PCC to the device, using a secure interactiongateway between the policy & charging control network elements and anapplication on the device.Top Use Cases and Operator ExamplesPackaging LTE Speed to Drive Revenue: Top Use Cases and Operator ExamplesMy PlanUp-sellNotificationPurchase* Openet research report - Charging & Billing for the Digital Economy, 2013 12. The Role of Policy Control: Openet Speed TierOpenets speed tier solution allows operators to successfully segment theirmarket to differentiate the service experience and increase data revenues.The solution is based on entitlements set within the Subscriber ProfileRepository (SPR) which forms part of Openets market leading PolicyManager product. When a subscriber begins a data session it triggers amessage to Openet Policy Manager. Policy Manager reviews the SPR forthe customers entitlements. Openet Policy Manager enforces the rulesthrough the Enforcement Point (a network packet gateway or deep packetinspection node).SPR12 Packaging LTE Speed to Drive Revenue: Top Use Cases and Operator Examples 13. 13Top Use Cases and Operator ExamplesKuala Lumpur, MALAYSIAPackaging LTE Speed to Drive Revenue: Top Use Cases and Operator ExamplesSince the introduction of mobile data services in 1998, Openet has helpedservice providers capitalize on opportunities and overcome challenges. Withcompetitive pressure accelerating, todays service providers rely on Openetsoftware to evolve business models around networking smartphones, M2Mdevices and third party services. Openets portfolio combines policy andcharging control with device and third party interaction to enable innovativecharging models, to control operating cost and to personalize services.More than 80 of the worlds largest service providers across over 30countries use Openets high performance software.Openet has helped operators worldwide take advantage of growthopportunities by evolving legacy platforms to provide a flexible, real-timecharging/OCS capability integrated with policy control (PCC).For more information, please visit www.openet.com.For more information,please visit www.openet.comDublin, IRELANDReston, Virginia, USASo Paulo, BRAZILTel: +353 1 620 4600Tel: +1 703 480 1820Tel: +60 (3) 2 289 8500Tel: +55 11 2395 7200About Openet