Value-based pricing posed against tablet bill shock

Erwann Thomassain/Amdocs
19 May 2011
Daily News

According to Gartner, media tablets sales in the Asia Pacific region are expected to grow from 2.145 billion units in 2010 to 31.493 billion in 2014 –a compound annual growth rate of 96%. As the launch of Apple’s iPad 2 beckons in the region, there is no doubt that the age of the tablet is near. The tablet is changing the way we do just about everything. Today, people are using it for a widening variety of purposes.

Whether we are discussing the iPad 2 or other competing tablets slated to debut in Asia in 2011, service providers will be thinking about how to effectively bill for data services while safeguarding their networks from data overload.

Most service operators today have pricing models that are based on data usage or speed. The challenge lies with the fact that most subscribers do not instinctively know how much data they are downloading when they’re checking their emails or streaming a music video. The same can be said of speeds – it is almost impossible to know what speed one is operating on without checking with one’s device or service provider.

All this makes it hard for subscribers to anticipate how much they will be charged at the end of the month. With the growing trend of data roaming, there is also the risk of bill shock, which ultimately leads to challenges like high customer churn for service providers.

A new approach, known as value-based pricing, might just be the answer. Value-based pricing is where the price is determined based on the value perceived by the customer. There are so many different user demographic present here – from the heavy e-mail user, to the music downloader – to offer an optimal rate plan based on usage and consumption behaviors. Behind the scenes, service providers will still need all the advanced pricing schemes to move away from unlimited data gridlock, but the outcome communicated to the customer should be simple and intuitive to understand.

Let’s say you survive your commute to work by streaming episodes of your favorite television show to your tablet. Instead of having to figure out how much data an episode takes up, what if service providers offer a 10-episode “data deal” with all the prerequisites, such as data quotas and speed, already included? Customers won’t have to worry about going over their allotted data, and can just sit back and relax.

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