The
telecommunications industry is facing a fundamental issue: on the one hand,
increasing requirements for new investments in broadband Internet access and
transport infrastructures that support continuous growth in broadband traffic;
and on the other hand, reduced ability to exercise pricing power with customers
and, thus, increase revenues.
Meanwhile,
traditional voice and messaging revenues have strongly declined due to
commoditization, and this trend is expected to continue. Therefore, operators
are now relegated to connectivity products. The value that operators once
derived from providing value-added services is migrating to players that
deliver services, applications, and content over their network pipes.
If this is not
enough, Internet access prices are dropping, sales volumes are declining, and
markets are shrinking. The culprit: flat rate “all-you-can-eat” pricing. Such a
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.
Now is the time for
the telecom industry to consider innovative pricing models for broadband
services to enable a better match between the price customers pay and the value
they derive from services. Successful pricing strategies will be essential to
directly managing profitability for both fixed and mobile broadband operators.
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1 comment:
Thanks alot for sharing these wonderful thoughts. Yes indeed, the real focus in the broadband market should be to provide quality in service. The idea of "All you can eat" is really not helpful. Thanks again.
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