Operators are looking to increase revenues from mobile broadband by introducing new pricing models. However, as the simplicity of charging models is crucial, tariffs that are tiered according to speed are attractive to operators as they are a well understood fixed broadband tariff model.
Tiered pricing based on speed is one of the most common pricing models for mobile broadband as it provides operators with an upselling opportunity, especially if the lowest tier is attractively priced. This type of pricing aims to keep customers loyal, but it will need to include data usage caps so that operators can extract extra revenues from additional data usage.
There is an excellent opportunity for operators to remove unrealistic speed claims, “unlimited” usage caps that aren’t actually unlimited, and hidden clauses and usage charges in fair usage policies. There will still be a problem as to how different operators define “average speed”, but at least these advertised speeds will be far closer to reality.
In some countries, such as New Zealand, operators are banned from advertising speed claims of any sort. One way to circumvent these regulations could be to offer a different device for plans that offer different speeds. For example, a 3.6Mbps dongle could be offered to tier-one users, while a 7.2Mbps dongle could be offered to tier-two users.
Not all operators will want to abandon the marketing of peak speeds as they can be a key differentiator between operators, especially in developed markets. However, consumers are sick of actual speeds not living up to advertised theoretical speeds, and regulators are taking their complaints seriously.
Ofcom’s regulations could be a sign of what is to come for Singapore and eventually other parts of Asia-Pacific should no “honest brokers” emerge to appease regulators.