“For now, charging by volume and adding content as a differentiator is increasingly being offered. For operators that do not include this content in the monthly data allowance, they are better monetizing the data opportunity,” Ovum’s McCormick observes.
In any case, she adds, it’s good news that APAC operators are putting less emphasis on unlimited data in Asia Pacific than they did five years ago. “In 2010, just over half of respondents said unlimited data was the best way to charge for consumer mobile broadband services, but as network speeds increase, linking volume usage to pricing provides a better alignment of revenues to costs.”
There’s also burgeoning interest in QoS/SLA based models, although these remain in the vast minority, and are more likely to be deployed by integrated operators than standalone cellcos.
Interestingly, while a number of cellcos already offer shared data plans as an option for consumers, not a single cellco selected it as an effective model. But it’s early days, McCormick notes. “Outside the US, shared data plans have largely struggled to gain traction, due to their complexity. But with the rise of connected devices, shared data plans will become more the norm.”
The priority list
We asked operators to rate their priorities for LTE in 2015. And unsurprisingly, capacity expansion is the most urgent priority. And for the most part, operators are banking on carrier aggregation as the way forward, although integrated operators are somewhat more likely to be looking at additional bands and macro buildouts (theoretically because they have relatively more generous capex budgets than standalone cellcos).
“`Getting the network right’ is a main priority for mobile-only operators as that is their bread and butter,” McCormick says. “In order to achieve that, operators are turning to carrier aggregation to improve speed - which is still considered a key market differentiator - and capacity. The challenge will be how to monetize that higher speed network. As per above, moving from unlimited to volume based pricing is a sensible move when improving network speed.”
For many cellcos, VoLTE is a strong second on the priority list. That’s not surprising, McCormick says, “since VoLTE initially is more about reducing opex, and that is a key priority for mobile-only operators that face ongoing network upgrade costs.”
That said, that focus on VoLTE won’t result in too many commercial launches in APAC this year. Just 17% of cellcos say they’ll launch VoLTE this year. But next year may be the big year for VoLTE - over 60% of cellcos said they’ll launch in the next 1-2 years. (For the record, no one said “never”.)
We also asked about everyone’s priorities on the business/operational side of their LTE strategy for 2015. By far, increasing ARPU is the top priority for everyone this year, followed by building up market penetration and subscriber bases, and improvements in customer service.
However, most operators are going to find ARPU growth a hard slog, McCormick warns. “The main way to increase ARPU is to increase tariffs. But that won’t be a reality for most markets. Rather, operators will need to focus on the upsell opportunity - which they are not too good at doing - and selling additional services to customers, which is also a struggle.”
As such, McCormick strongly advises all operators to throw their weight behind improving customer service. “A good offering and good network is meaningless without good customer service. Omnichannel will be crucial to the customer experience.”