Innovation has not traditionally been associated with mobile broadband pricing. But that is changing.
Increasingly, operators in Asia Pacific are implementing charging models for small-screen and big-screen mobile broadband services that are designed to either maintain customer loyalty or extract additional ARPU from subscribers.
For example, Indonesia's Indosat has introduced the "Broom-Kalong" or the "Batman" night-only package. With the package, 5GB of data can be downloaded between midnight and 6 am, at a download speed of up to 1 Mbps for $10 a month. The objective is to attract high-usage peak-time users to the off-peak period by offering more incentives - a bigger quota threshold, cheaper monthly price and higher speed. While this offer is very niche, it likely to be attractive to young users, students and other value seekers.
Unlimited free Facebook offers are also increasingly common, particularly on smartphones, where Facebook traffic is not counted toward the monthly usage allowance. For example, in AustraliaOptus bundles unlimited Facebook for small- and big-screen users.
On the other hand, Globe Telecom in the Philippines is charging for Facebook. Its Surf All Day prepaid promotion includes unlimited Facebook usage for 24 hours for PHP20 ($0.46). This will help to offset the loss of text/SMS revenue. XL in Indonesia also charges users for its Facebook mobile service (albeit only those on small-screens today) across three different time bands.
Meanwhile, quality of service tariffs are beginning to emerge. But Ovum's view is that operators in extremely competitive markets will struggle to up-sell such plans to consumers, especially if such services come with the caveat of a speed guarantee only "where possible".
Rather, we particularly like the speed-based tiered pricing models that have emerged in Hong Kong and Indonesia for big-screen users. Hong Kong operator CSL offers the same data bucket but at different price points and speeds while Indosat offers different speeds combined with different data allowances. Speed can also be used to position value-added bolt-ons. Indosat offers an online Turbo Speed feature for 3.5G users, which releases the speed limitation on the unlimited package for a certain period of time or certain amount of traffic volume.
Speed-based plans make sense for several reasons. Firstly, this model is widely adopted in the fixed broadband market, so it is well understood. Secondly, tiered usage plans mean operators can segment the market, providing a ready up-sell path, which is crucial to maintaining customer loyalty.
However, it makes more sense to segment mobile broadband tariffs by average or typical achieved speed, rather than maximum theoretical speeds. Fixed and mobile operators are coming under increasing pressure from advertising standards agencies over misleading speed claims. Therefore, selling mobile broadband based on average speed pricing is an excellent opportunity for an operator to become the "honest broker" - cutting through the "up to" speed marketing claims that can be damaging and costly.