Telecom Execs See “Tiered Pricing” As Suitable Progress

by Jordan Richardson on August 25, 2010

According to a survey published on Monday, 391 telecom executives see tiered pricing as “the way forward” when it comes to the markets in the sector.

The survey, published and handled by the law firm Freshfields Bruckhaus Deringer, discovered that the telecommunications executives are leaning towards ending flat-rate data plans and moving more towards tiered pricing. This is because the flat-rate plans have led to more traffic but little revenue in exchange.

The poll found that 55% of executives favoured tiered pricing, while 47% agreed that the current “all-you-can-eat” style models were roadblocking their ability to earn more revenue for their respective businesses.

About half of those surveyed suggested that operators would focus on developing new pricing models altogether.

Usage-based pricing is a popular item on the agenda for the executives because it enables them to cap demand and contain expenses, but how will consumers react to a shift in the availability of data plans? With a flood of unlimited data plans spread over almost all carriers, how sustainable are the current pricing models?

Flat-rate data plans were introduced to lure customers in the doors of the carriers, but it looks like the game is changing now that executives are realizing that there wasn’t as much money in offering customers worthwhile services after all. With the current discount battles, more of these unlimited plans will be used to leverage new customers out of the hands of the new providers and back in to the “rightful” clutches of the incumbents. But how long with the love affair last?

The survey’s findings suggest that companies will start seriously researching and implementing new pricing architecture over the next three years, so the honeymoon could be coming to an end faster than we think.

In large part, the problem is that the executives and marketing departments didn’t really see to believe that the lowly consumers would consider “unlimited” plans to actually be, you know, unlimited. Now that popular products like Apple’s iPhone are “crowding” networks with data usage, the carriers are wondering where the revenue is to cover the network operation costs.

Where this really gets down to the nitty-gritty is in the realm of market types. There is some division, to say the least, about the “best way forward” from various markets internationally. Mature markets, like those in the United States presumably, favour the notion of tiered pricing with far more vigour than those in developing markets. The developing markets, conversely, seem to favour basic voice and data plans over tiered pricing plans based on usage.

As to the lowly consumers, it looks like the party’s over. Put away the balloons, kids, and get ready to slow down on all that texting. The executives want their cut and there’s nothing you can do about it.

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August 14, 2012 at 5:54 am

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