Ovum Analysis Indicates Phone Carriers Have Lack of Innovative Pricing for 4G LTE

[dgstorm]

According to a report from market strategy firm Ovum, smartphone carriers are missing the boat when it comes to innovation on pricing models for 4G LTE service. On the one hand, the report indicates that the carriers are not squeezing all the profit out of their 4G LTE packages that they could with innovative pricing models; however on the other hand, Ovum also indicates that unlimited data plans were "problematic". Ovum further shared that they were "disappointed" in the LTE pricing strategies of carriers in Europe, Asia-Pacific, and the United States. Ultimately, Ovum believes that the carrier's really have missed an opportunity to create innovative and imaginative pricing structures for 4G LTE services. Here's a quote from the press release,

The report also found that charging high premiums for LTE is unsustainable in the long-term due to competitive pressures in the industry and increased migration to 4G services. McCormick added: “Operators will need to be careful not to alienate high-end customers that have paid a premium for a fast, high-quality service by reducing LTE tariffs too quickly or drastically.”

It's interesting to see a third party perspective on this. On one side of the coin, they apparently are unimpressed with the current pricing structure, which most of us can agree with. On the flip side of the coin, they do not advocate any kind of unlimited plan at all, which is disappointing. Apparently, the carriers are going to ignore them anyway, which is unsurprising...
Here's the full press release,

Lack of innovation in LTE pricing models, report finds

5 August 2011 | Published by Ovum

Operators that offer high-speed mobile broadband technology LTE are failing to deliver innovative pricing models, according to Ovum.

In a new report*, the independent telecoms analyst firm claims that there is a lack of new and innovative LTE (long term evolution) tariffs, which is a missed opportunity for operators given that LTE is a new service in the eyes of consumers.

Nicole McCormick, Ovum senior analyst and author of the report, commented: “We looked at the LTE pricing strategies of operators in Europe, Asia-Pacific, and theUS, and were disappointed with our findings.

“LTE provides operators with the opportunity to experiment with new and innovative pricing models, which allows them to find the best way of deriving revenues from the premium service.

“However, most operators have not grasped this opportunity. Instead, LTE tariffs in the regions Ovum analysed are dominated by unlimited offerings and large data buckets, which can be problematic.”

According to the report, unlimited data plans for LTE can present significant problems for operators, especially if they are accompanied by a lenient fair usage policy.

McCormick commented: “Operators should not offer unlimited LTE tariffs without some sort of deterrent as they could have an impact on the quality of the service given LTE’s data-intensive nature. However, we note that some leading operators –Verizon Wireless,SKTelecom, NTT DoCoMo and LG U+ – have steered clear of unlimited LTE offerings despite offering such packages in the 3G arena.”

The report also found that charging high premiums for LTE is unsustainable in the long-term due to competitive pressures in the industry and increased migration to 4G services. McCormick added: “Operators will need to be careful not to alienate high-end customers that have paid a premium for a fast, high-quality service by reducing LTE tariffs too quickly or drastically.”

Source: BGR

 

[loki993]

Im confused, are they saying their charging too much or not enough? lol

 

[eagle1967]

too little?>

Im confused, are they saying their charging too much or not enough? lol

Looks to me they are saying they are not charging enough.
the mention of the new tech (which is ussually highly over priced)
I dont think they understand the worlds econmics right now.
verizon is making money by charging a 50 dollar spike at minimum for the 4g phone.
ATT is just making the 4g phones worthless with their pricing and limits.
tmobile is affordable and offers similair to verizon slightly cheaper..
and doesnt charge the 50 dollar premium but limits and throtteling
sprint is unlimited similair pricing no 50 dollar premium but poor service and slow speeds.

Not sure what this article wants them to charge. but i know i wouldnt pay much more than i am now. and verizons would lose my business if i ever get switched to 2 gigs for 30 dollars.
I think these companies did their homework pretty well. yes we are all pissed about it but we are paying it. but i dont think they could go much higher or they would lose a lot of monthly payments.

 

[DroidXDoes4G]

So they want 4g to be more expensive? Oh crap.

Sent from my DROID3 using DroidForums

 

[loki993]

Im confused, are they saying their charging too much or not enough? lol

Looks to me they are saying they are not charging enough.
the mention of the new tech (which is ussually highly over priced)
I dont think they understand the worlds econmics right now.
verizon is making money by charging a 50 dollar spike at minimum for the 4g phone.
ATT is just making the 4g phones worthless with their pricing and limits.
tmobile is affordable and offers similair to verizon slightly cheaper..
and doesnt charge the 50 dollar premium but limits and throtteling
sprint is unlimited similair pricing no 50 dollar premium but poor service and slow speeds.

Not sure what this article wants them to charge. but i know i wouldnt pay much more than i am now. and verizons would lose my business if i ever get switched to 2 gigs for 30 dollars.
I think these companies did their homework pretty well. yes we are all pissed about it but we are paying it. but i dont think they could go much higher or they would lose a lot of monthly payments.

It seems like that at first but then they say this:

McCormick commented: “Operators should not offer unlimited LTE tariffs without some sort of deterrent as they could have an impact on the quality of the service given LTE’s data-intensive nature. However, we note that some leading operators –Verizon Wireless,SKTelecom, NTT DoCoMo and LG U+ – have steered clear of unlimited LTE offerings despite offering such packages in the 3G arena.”

The report also found that charging high premiums for LTE is unsustainable in the long-term due to competitive pressures in the industry and increased migration to 4G services. McCormick added: “Operators will need to be careful not to alienate high-end customers that have paid a premium for a fast, high-quality service by reducing LTE tariffs too quickly or drastically.”

So which one is it lol. They pretty much contradict themselves from the beginning to the end.

 

[OneTenderRebel]

Tiered data plans will help make up the cost of not charging more for 4g. Especially when 4g starts going live in other places other than the big cities. new contract customers who didn't know how much data can be chewed up with 4g will start seeing after streaming one movie on netflix and a few songs on Pandora that they are already at 2gb's. I think tiered data plans were a direct response to 4g. VZW knew that 2gb's at 30 a month was unrealistic for moderate data users so that is why they did it.

 

[kodiak799]

Interesting. But at least in the US there's nothing right now really forcing people to switch from 3G, and with that huge LTE investment they can't really be charging more and deter people from upgrading.

And great point about the premium for LTE phones. Sneaky way to jack-up the return while keeping rates flat.