Timid price strategies mean muted LTE uptake

Dianne Northfield/Tolaga Research
30 Aug 2011

Service providers are, to date, adopting conservative approaches to LTE service packaging and pricing. The lack of novelty in pricing plans is indicative of the unwillingness of operators to adopt aggressive strategies in light of the nascent LTE service and device markets.

While there are exceptions to the norm, the lack of unlimited, flat rate and contract free LTE plans indicate that service providers are adopting a wait and see approach rather than focusing on service differentiation to drive service uptake.

The prevalent LTE service plans are characterized by multiple tiered data offerings with prices based on different:

·Monthly data allowances

·Overage charges

·Advertised service speeds

·Contract periods

Within these parameters, there is significant variance in LTE offerings. Monthly data allowances range from 1GB (CSL, Hong Kong for $11.20 to $24, MetroPCS US for $50) to 50GB along with a $125 price tag, as recently announced by T-Mobile in Germany. Within this range, service providers are generally offering services with data caps between 20GB to 30GB in Europe, with much lower data allowances (1GB to 10GB) emerging in packages offered in North America and Asia.

In Europe prices for 30GB capped services range between $45 and $120 with variances dictated by different contract terms. The pricing range for 1 to 10GB packages in North America and Asia range between $11 and $98, with variances again determined by different contract terms and service speeds.

Overage charges have generally been set on a per GB basis when a subscriber hits a monthly data allowance cap. In some cases some service providers are explicitly reverting to throttling a user’s bandwidth down to kbps service level speeds. When a new service month begins, higher speeds are then re-enabled. The average overage charge across LTE service providers is $10 per extra GB.

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