Mobile industry calls for new pricing model

Almost half of industry executives want a new pricing model for phone tariffs.

Mobile tariffs

Developing a new pricing model for mobile phone tariffs is a "critical challenge," according to research.

Almost half (48 per cent) of mobile executives felt there was a strong case for changing the way customers paid for their mobile usage, according to the survey conducted on behalf of law firm Freshfields Bruckhaus Deringer.

What's more, respondents believe new pricing will be developed over the next three years.

The most popular new model mooted is tiered pricing, with 55 per cent of respondents favouring it, and 47 per cent believed the current "all you can eat" data plans were damaging opportunities to create more revenue in the market.

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Natasha Good, co-head of the mobile group at Freshfields Bruckhaus Deringer, said: "With pricing positioned firmly at the heart of the solution to the mobile industry's challenges, questions remain over whether consumers will be easily weaned off flat-rate data tariffs and how long mobile operators can stave off the need for investment in new technologies and infrastructure to maintain quality levels for a new breed of data-hungry consumer."

A further argument for change comes from the belief of over a third of respondents 37 per cent in mature markets such as the UK that app downloads will be the main source of mobile revenues within three years, exceeding both voice and video.

In emerging markets executives disagreed, with 78 per cent seeing voice and data plans as more "commercially viable."

The survey highlighted other challenges, including the cost of funding next generation networks and making sure capacity for traffic was up to scratch. However, 60 per cent of respondents claimed a change to pricing would help solve these issues.

"Mobile providers are remodelling their pricing strategies to sweat their assets whilst tentatively looking at new product offerings," added Good.

"The telecoms community is tackling a twin challenge: maximising revenue from existing services to protect profit margins and managing the increasing strain on the networks. Usage-based pricing is a logical solution. It will ease current capacity issues by capping demand, contain capital expenditure requirements and potentially increase revenue."

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