In the early days of wireless, rate plans were an a la carte-style hodgepodge of offerings at a host of price points. Like new cars, basic calling plans could be packaged with premium options such as voicemail and caller ID, and a consumer often had to be aware of multiple geographic rates including a “home calling area,” the carrier’s entire network and roaming areas on partner networks.
AT&T Wireless Services Inc. changed all that nearly 10 years ago with its popular Digital OneRate plan. The remarkably simple offering included only three all-inclusive plans that eliminated charges such as roaming and long distance.
More options, more room for confusion
It didn’t take long for other carriers to make things confusing again, however, luring new customers with free minutes at night and on weekends. Rates can vary according to whether both callers are on the same network, or whether the two are in each other’s calling circle.
The breadth of today’s mobile services only convolutes things further: in addition to simple voice usage charges, a high-end user might also get dinged for text and multimedia messages as well as subscriptions to a GPS-enabled application, a mobile game and on-the-go Internet access.
And just as all those variables can be overwhelming to customers, they can leave customer service staffers scratching their heads. That’s what one blogger found several months ago when he made 56 calls to Verizon Wireless’s customer service line. The anonymous writer, who posted a video of the experiment on EyelessWriter.com, asked every representative two questions regarding data charges for roaming and overages.
His questions prompted 22 different answers. Only 2% of operators answered both questions correctly, according to the blogger.
All that confusion serves as a massive roadblock to uptake, said RealNetworks CEO Rob Glaser. Which is why carriers should take a cue from cable TV operators, who two decades ago decided to offer a basic package of access at a flat rate with a handful of premium channels for a few more dollars a month.
Basic or premium?
“They created an offering where the question was a very simple one: Do you want basic cable or not?” Glaser said. “There were a couple of add-ons, but the way it got from zero (percent) to 50 (percent) was by having a simple proposition. If you look at the growth curve of cable in the ’80s and into the ’90s, it was all growth from the basic tier.”
Instead of offering vast menus of premium services on top of calling plans, Glaser urged operators to devise flat rates that include many of the bells and whistles that have come to market in the last few years. Carriers could dangle a $10 or $20 package that includes unlimited data usage, for instance, as well as multimedia services and a choice of several content offerings.
Those price points may result in smaller margins for each of the links in the revenue chain, of course, in a market where some of the players say they’re already being squeezed too tightly. But the tack could draw more than enough new users to offset the losses, according to Glaser.
“If you look at the number of data plans, media-plan packages that customers have, I think you’d be hard-pressed to get over 10 (million) or 15 million,” he estimated. “The general answer is, when you have an audience-based business, you want to get the largest possible audience you can.”
Glaser concedes that he may be tilting at windmills, given the conservative nature of U.S. carriers. But mobile operators are increasingly being pressured by Apple Inc., Google Inc. and Nokia Corp.’s Ovi, he noted, and may look to counter the newcomers by dramatically overhauling their pricing plans.
Just one carrier could dramatically change the game, Glaser opined. But whether any of the entrenched players is willing to make such a bet is far from clear.
“It will take someone to be the rabbit jumping out in front. … OneRate was one of those never-go-back things. I think this has similar possibilities,” he said. “We’re seeing very serious conversations (with carriers) at the murmur level, at the ‘Huh, that’s interesting’ level. But I don’t think there’s anybody who’s going to jump a week from Thursday.”
