Almost half of international mobile executives (48%) predict mobile operators will focus on developing new pricing models over the next three years, with 55% agreeing that tiered pricing is the way forward in mature markets and 47% arguing flat-rate "all-you-can-eat" data tariff plans are damaging their ability to increase revenue, according to a survey commissioned by international law firm Freshfields Bruckhaus Deringer.
The cost of funding next-generation networks (44%) and ensuring adequate backbone capacity for future traffic loads (37%) are also identified as critical challenges whilst more than 60% believe pricing mechanisms will solve or mitigate the strain on the networks caused by data-hungry devices such as internet-connected smart phones. The move towards usage-based pricing models is predicated on an aggregate increase in data traffic. In mature markets, 37% anticipate application downloads will be a main revenue source in three years' time, exceeding voice (36%) and video downloads (32%).
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Natasha Good, co-head of Freshfields' mobile group, says, "Mobile providers are remodelling their pricing strategies to sweat their assets whilst tentatively looking at new product offerings. 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."
"Pricing models tied to data consumption may be welcomed by regulators, who are increasingly scrutinising how internet traffic is managed. By squeezing demand for bandwidth through pricing, mobile operators are less likely to opt for traffic management tools such as choking the pipeline for users, perceived by some regulators to violate so-called net neutrality objectives." The picture on pricing differs in developing markets however, where 78% of mobile operators agree basic voice and data pricing plans are more commercially viable.