LEAPFROG TO MONETIZE MBB
Offering Strategy
Published Date: March, 2016
By Mohammad Alakhras
Aiming to help communication service providers think strategically and with foresight with
regards to digital-economy by focusing on various aspect of the digital enablement ecosystem such as cloud business, e-commerce, multi-side business model, big data, IoT, value
added MBB services, convergence, and on demand customer experience to boost CSPs’
position in the digital eco-system and drive innovation and advanced services to their
customers.
Leapfrog to Monetize MBB
C
CSPs continue to be squeezed financially. Data volumes continue
their exponential expansion; new generation network like LTE can
help drive mobile data usage, ensure better revenue streams, and
help mobile service providers stay competitive. Yet, the most carriers’ ability
to monetize MBB hasn’t kept pace with the rise. This means that most CSPs
are still struggling with tightening profit margins.
It’s not enough to add yet more discreet, one-size-fits-all offers and unlimited
and basic tiered data plans. Internet access prices are dropping, sales
volumes are declining, and markets are shrinking. A flat rate All-You-Can-Eat
pricing model lacks stability—sending service provider pricing into a
downward spiral— because it ignores growth potential and shifts the
competition’s focus from quality and service differentiation to price.
Successful offering strategies will be essential to directly managing
profitability for both fixed and mobile broadband operators. Below figure
illustrates the potential offering strategies that can be adopted by CSPs to
leverage the benefits of LTE and capture market share.
Customer Experience
Usage Based Offering
- 7Ps of the marketing
mix
- Discourage usage for
"bandwiidth hogs"
- Differantiation basded
on consumption
- Align customers’
perception of value more
closely with the
underlying broadband
service delivered
- Matches price paid to
most valued factor—
volume of usage—
providing reasonable
options for heavy- to
low-volume users
- Consumption is a
sophisticated
calculation; it will take
time, education, and
tools for consumers to
feel comfortable
estimating consumption
Customer Behavior
Customer Centric
Flat Based Offering
- 4Ps of the marketing
mix
- Encourage Service
Adoptation
- Differantiation based
on price and speed
- Consumers’
experience degraded
if they overused the
service
Consumption Behavior
Product Centric
Price Centric
Pricing Behavior
Value Based Offering
- 7Ps and 4Cs of the
marketing mix
- Differantiation based
on value
- Provide enhanced
value to specific
customer needs.
Built upon usage
based pricing
structure
- Focusing on the
diversity of Core,
Near-Core, and NonCore telecom
business.
- Muti-Sided and
convergent business
model (C2C, B2C, B2B,
B2B2C ...etc.).
Figure-1: Offering Strategy
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Leapfrog to Monetize MBB
U
Unlimited flat-rate offering strategy
divides the costs of the network evenly
across the customer base and might
create
congestion
by
encouraging
overconsumption. Flat rate pricing is also
extremely simple to implement and market.
Competitive differentiation is based on price and
access speed. Flat-rate offerings shift the focus
from quality and service differentiation to price
competition, and expose operators to the risk of cost-plus-based pricing, with
diminishing returns.
While usage-based offering strategy shifts more
of the network’s costs onto those who use the
network the most and can encourage users to
use bandwidth more efficiently, for example by
demanding that services use better compression
technology to deliver content online. Usagebased offering is susceptible to anti-consumer
manipulation by CSPs and can suppress
activities that generally encouraged, it threatens
future growth and innovation on the Internet (1), it can curtail traffic explosion
for some customers.
CSPs must remove barriers to usage, then address individual needs, and
finally create new revenue sources. Incumbents, in particular, should lead the
market by creating more sustainable revenue models that focus not only on
the consumption and usage analysis then marketing new products
immediately, but also on effectively positioning the value of more advanced
services in the minds of their customers.
Considering the value-based offering strategy for
broadband business will enable a better match
between the price customers pay and the value
they derive from services, so it is important to
start defining tier levels that fit costumer
behavior, profiles, and usage needs without
impacting customer spending. For example, the
value
of
using
demographics
and
psychographics, through adopting new multi-sided and data-driven marketing
models is important to identify and personalize offers to a variety of market
micro segments and increase customer lifetime value and reduce churn.
Some CSPs exploit the traffic explosion introducing new “data-centric” offers
and commercial models to improve revenues, retain customers and monetize
network investments. Such offers succeed only if paired with reliable LTE
network.
1)
Charge-then-refund model is the most interesting usage based offering adopted by Google Fi. It is
clever marketing, meant to distinguish Google from traditional broadband providers. Google refunds
the customer at the end of the month for any data purchased but not used. So if a customer purchases a
3GB plan for $30 but only uses 2.4GB, he or she will receive a $6 credit.
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Leapfrog to Monetize MBB
T
The Vodafone group, extensively includes VAS such as Spotify or
Netflix in order to promote a premium network experience (speed &
coverage), USA market show s a family oriented approach to mobile
services (e.g. share plans), while in Europe, instead, the more personal
approach, leads some MNOs to focus on multi-device offering for single
customers (e.g. Wind Magnum offering 1 extra data-SIM in addition to voice +
data plans). (2)
Sample Offering

App Specific Offering: CSP can retain customers, stimulate data usage
and generate new revenue through making customers enjoy unlimited
access to social network with value-for-money offering by detecting the
customer attempt to use specific service (e.g. HTTP music site) or
application (e.g. VoIP; IM, Facebook, YouTube). Offering can be based
on service type (e.g. download, mobile TV, music streaming…etc.) content
type (e.g.), device type (smart phone, tablet…), time of day, loyalty points,
usage behaviour…etc.
Below are some examples:
Charge customer $0.99 for downloading from amazon “Harry
Potter Series” book.
To get existing customers more comfortable with the idea of
using mobile data, CSP can give free or low cost opportunities
to sample mobile broadband which would erode customers’
apprehension and drive more of them to adopt plans that
include some form of broadband access. Although it is difficult
to determine what proportion of the population would have
adopted mobile social media even without the promotion, e.g.
Turkcell reported the free Facebook offer helped spark an
820% increase in mobile Facebook use in 2010. By the end of
the year, 6.5 million Turkcell customers were accessing
Facebook on their phones each month. And Twitter Zero led to
a 340% increase in mobile Twitter use. These translated into
significant up selling opportunities for the company. Turkcell
sold 30,000 social media packages in the first week the add-on
was available, and 600,000 in the first four months. Turkcell
reported this promotion increased average revenue per
customer by nine percent.
Smartphone users can enjoy unlimited Skype-to-Skype,
discounted international calls, “always on” status and more on
Skype for $2.99 per month. Or of fer Windows Live Messenger
for 2$ per month.
2)
Arthur D. Little Analysis (2015H2)
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Leapfrog to Monetize MBB
B
Bandwidth Ondemand Offering: CSP can improve customer
QoE and generate new revenue by offering on-demand methods
when customers acquire higher QoS service, e.g. show a BoostButton to to get a better QoS on YouTube.
Now you are seeing video.
Do you need upgrade speed
by higher speed offering?
No
Yes
Time & Location offering: CSP can provide data offer based on specific
time and location to target causal mobile broadband and short-term
travelers. E.g. offer special packages with certain data cap limited by
hours, days or weeks.
Limit exceeded!
Buy a day pass for $3.99
S 7.2 Mbps
p
e
e
d

64Kbps
Do It Yourself Offering: CSP can acquire more customers and get better
customer expereince by allowing customers to customize their tariffs &
services according to own needs, e.g. happy hours & preferred
destinations, location based charging, specify preferred communication
channels, specify interest in future promotions…etc.
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Leapfrog to Monetize MBB

Multiple Tiers Offering: CSP can offer multiple tiers data plan: flat-rate
first for trial cap (small cap) and then usage-based pricing model. And
finally flat-rate pricing again after customers taste the sweet of 4G network
Pay-As-YouGo
25 OMR (Inc.
Tax)/Month
+
Excess packet
50
communication
OMR/Mon
For Months of charges
th
Little Use 0.1 OMR/KB
20 OMR (Inc.
20Tax)/Month
OMR 0.1/KB
OMR/Mon
th

Limit
50 OMR (Inc.
Tax)/Month
Digital Services such as mobile money, IoT and Cloud-based consumer
and business services offer encouraging prospects for CSPs, which are
aiming to create double-sided business models to either compete or forge
tie-ups with players such as OTT service providers. The established
customer and billing relationships, along with large amount of behavioral
data are key advantages for CSPs to widen their presence across the
Digital Services landscape. For example:
AT&T’s wireless network powers the two-way vehicle
communications, remote engine diagnostics, and infotainment
features of Tesla’s cars.
Verizon offers home automation and energy mgmt. solutions,
which can be controlled remotely from iPod touch, smartphone
or FiOS TV.
Vodafone’s connected cabinets’ service enables retailers to
monitor cabinets’ stock and temperature remotely and view
real time itemized sales.
Malaysian provider Digi held a promotion allowing customers
five consecutive days of unlimited WhatsApp access and
SingTel of Singapore recently began bundling WhatsApp with
its tiered pricing plans.
TELUS, Canada’s third-largest wireless provider, has signed a
strategic partnership with Microsoft to promote Voice-overInternet-Protocol (VoIP) provider Skype on many of its
network’s smartphones.134 The Skype app runs on both Wi-Fi
and the wireless network, and although se on the latter incurs
data charges, TELUS customers receive unlimited Skype-toSkype voice calls and instant messages.135 TELUS allows
customers the option to purchase Skype credit and have the
charge turn up on their monthly TELUS bills.
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Leapfrog to Monetize MBB
T
To achieve a successful business transformation shift to support the
value-based offering of MBB, First: CSPs need to develop new
strategies by establishing new set of objectives, desired timeline, and
KPIs to extract the utmost value out of the MBB assets, as both the
broadband service and service delivery is different than traditional voice
services, thus the traditional strategies applied for voice networks may no
longer be useful.
Second: an assessment of the current organization is vital for CSPs to
support the value-based offering capability; e.g. vertical silos need to be
dismantled (integrated service delivery and communication across different
lines of business).
Third: Operational processes need to be redesigned in a manner that
encourages seamless delivery of services and improve customer satisfaction,
e.g. marketing departments need to develop and deliver new communications
plans to clearly establish, in customers’ minds, the benefits of new offering.
Operators must also develop tools that enable customers to easily monitor
their consumption levels and alert them when those levels are nearing tier
limits—thus alleviating possible “bill shock.”
Bottom line, innovation, from many different directions, is the key to drive new
groundbreaking offering and improve customer experience, e.g. Telefonica is
building a huge business potential and contributing in the social economy
through their innovation business unit (3).
innovation
Unit
Org Alignment Choice
New Innovative
Offering
+
Customer
Expereince
Operation
Enhanced
Business
(Effcient MBB
Monitization...
ect.)
Business Model Choice & Technology Choice
Figure-2: Innovation Driven Offering Strategy
3)
Telefonica’s wants to "realize the vision of the new digital world, become one of the leaders in the
field". Set up in 2011, the innovation business unit Telefonica Digital, is responsible for the
integration and development of innovative business areas on top of its network, in areas covering
financial services, m2m, electronic medical, advertising, video & media, security and cloud
computing . Telefonica Digital has a huge business potential and develop the social economy at the
same time. Telefonica Digital is grew from €2.4 billion in 2011 to €5 billion in 2015, which
equivalent to 7.8% of the group revenues compared with 3.7% in 2011
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Leapfrog to Monetize MBB
I
Innovation capabilities need to be employed in the marketing
organization to essentially build mid to long-term offering strategy and
ecosystem based on pricing, service, and consumer behaviors. Also to
work on the below aspects:

Understanding the available differentiation capabilities to empowering the
CSP commercial and marketing strategies and objectives, and identify
where investments in mobile broadband capacity are needed, while
avoiding over-dimensioning and unnecessary expenditure.

Adapt the CSP portfolio and business model toward digitization strategy
and market trends.

Business Transformation Planning: Analysis and articulate how the
systems and technology transformation can improve business efficiency.

Innovate new products, processes, services, or ideas to cover Core, nearCore, non-Core telecom business.

Obtain and grip on customer experience by discovering what customer
think & feel about their experience with the brand to point out areas of
weaknesses and improve the effectiveness & efficiency of the delivery
channels.
In conclusion, service differentiation realizes a win-win scenario for CSPs and
their customers. CSPs benefit through new revenue channels, improved
network utilization, and ability to offer differentiated service models by
optimizing the individual user experience and linking it to the right price point.
The industry should move away from flat rate penetration pricing and start
experimenting with new offering models based on sophisticated traffic
analysis and traffic prioritization mechanisms that result in more advanced
pricing structures.
Competitive differentiation can be based on multiple value dimensions that
could be combination of the pricing, traffic, consumption, and consumer
analysis. With multitude of differentiated offerings, consumers now pay for
what they need as they enjoy the expected QoS and value as per their
subscription plan.
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