Pricing 4G at a premium or offering unlimited data not effective strategies
Operators that lead on network quality can differentiate themselves from rivals
OPERATORS need to align 4G (Fourth Generation) network rollouts and upgrades with clear marketing that highlights the advantages of 4G technology over 3G, according to the latest research from Ovum.
Furthermore, 4G pricing must add more value to end-users to put operators in the best position to maintain ARPU (average revenue per user) levels through higher levels of mobile broadband usage, the research firm said in a statement.
According to Ovum’s latest research (4G Best Practice: Operator strategy to launch 4G and stimulate mobile broadband usage), pricing 4G at a premium or offering unlimited data is not an effective strategy to profitably increase LTE (Long-Term Evolution) subscription uptake.
The most successful 4G operators by subscriptions either launched 4G at no premium to 3G or quickly moved to price 4G at the same level as 3G.
Faster download and upload speeds were found to be insufficient to justify a premium for 4G over 3G for all but the highest-spending mobile users – and only at the initial stages of 4G rollout.
“Rather than this meaning operators can’t increase revenues from 4G services, there is evidence from leading 4G operators in the United States, South Korea and the United Kingdom that not charging a premium for 4G will increase data revenues,” said Paul Lambert, Ovum senior analyst and author of the report.
“This is because the enhanced quality of the 4G user experience stimulates usage,” he added.
The report finds that in order to stay competitive, successful 4G operators have evolved their pricing by bundling more value with 4G subscriptions.
By doing this, they have been able to differentiate around content and also migrate subscribers to higher-cost monthly plans by offering incrementally more data and content at higher prices.
Being able to communicate what difference 4G will make to mobile users is crucial, especially at the time of launch.
To maximise the value of 4G investments, the technology must be used as a platform to reinvigorate operators’ brands by focusing on how it offers a new and enhanced network experience.
“EE in the United Kingdom is a great example of how an operator used its 4G launch to focus its market positioning around offering a premium mobile broadband experience, largely based on speed,” said Lambert (pic).
The experience of the world’s leading 4G operators by subscriptions shows the importance of maintaining a 4G network advantage. Because the network has a direct impact on the quality of the network experience, operators that lead on network quality can differentiate from rivals.
“Operators have to effectively communicate the enhanced network experience to end-users,” said Lambert.
“The most successful 4G marketing messages to date have communicated the speed advantages of 4G over 3G without highlighting actual download speeds, which is neither understood by all consumers nor is necessarily an accurate reflection of real-life network speeds,” he added.