Complex Data Pricing Threatens to Alienate Consumers

by Matt Klassen on July 27, 2015

Hounded by the threat of irrelevance wireless carriers have, for the most part, initiated an industry wide evolution, transitioning away from their traditional role as network service providers towards becoming more profitable content providers. But by expanding their products and services the wireless industry has been hit with an unforeseen issue, the increasing complexity of data pricing plans and billing, a problem that has left many consumers reeling as they try to figure out what company can best meet their digital needs.

It’s what author Barry Schwartz dubbed “The Paradox of Choice” in his 2004 book, the anxiety that is caused when service providers offer too many options for consumers to choose between, and it’s a problem we are seeing across the wireless industry today. While carriers think that offering a myriad of options to meet the unique needs for as many consumers as possible, choice can paradoxically lead to consumer apprehension and outright avoidance of the service altogether.

Not only that, but the increasing complexity of data pricing plans is likely only going to worsen as we go forward, particularly in light of the looming IoT explosion. Thinks it’s complicated when you have to connect a handful of devices, get television service, and a home phone? Imagine just how complicated things will become when you have dozens of devices that need a data connection as part of your connected everything existence, and just how many advanced accounting degrees you’ll need to figure out how much you’ll have to pay.

There’s no question that confusion abounds when it comes to data plans in the American market, as companies continue to rollout and subsequently scrap data pricing schemes that leave many consumers wondering exactly what plan they’re on, and why their neighbour suddenly seems to be getting a far better deal.

Remember Sprint’s short-lived “Framily” plan? The company spent millions to rollout out the plan last year, only to scrap it a mere eight months later. Consumers complained that the plan was far too complex, and they struggled to understand the value they were getting or how it compared to competitors offerings.

Now recently T-Mobile has seen the need for pricing simplicity, even calling their most recent campaign the “Simple Choice Plan.” But even when T-Mobile attempts to simplify things, the market itself seems to be spiralling into a vortex of confusion, as now customers are faced with understanding phone leasing plans (which replaced the traditional contract), post paid or pre paid plans, data allotments, how many devices need to be connected, and what uses data and what doesn’t. And like I said, if this confusion exists while customers attempt to connect a handful of devices, imagine what data pricing will look like when everything in your house needs a wireless data connection.

So what exactly is the answer for the wireless industry? Strangely enough there are some examples abroad that may offer some insight into what data pricing will eventually become in this market. Take the Philippines for instance, where wireless providers Globe and Smart have started to offer “Digital Lifestyle” packages that bundle data with certain OTT services, where consumers really just have to pick what sort of digital life they desire and the companies simply steer them towards those particular plans.

While these plans don’t offer the best performance or data allotments, the companies have found that they don’t really have too. As an article from DataPricingPlans.com explains, “If they can get customers to respond/empathize with a particular online/digital lifestyle, the decision for the customer is less about speeds and feeds and more emotional.”

As I’ve long said, with marketing and promotional campaigns coming at us fast and furious, it can often feel like you need to be a rocket scientist to work your way through it all, leaving many customers confused and alienated, wondering if they’re actually getting the best value for their dollar. There’s no question that going forward one of the key differentiated factors in the wireless world will be simplicity, but as we’ve seen, it’s one of the most complex things to master.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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