February 04, 2008

A Mobile Math Problem

By Hisham Isa, Vice President (Marketing)

Here's a math problem for all the telecom experts out there:

If John pays $25 for 10MB per month, how long can he spend talking on his phone or accessing the mobile internet?

Answer: Beats me.

And that's the problem - pricing models for mobile phone usage don't make sense to most people.

Indian and Thai operators have got it right, though. They're now packaging their products in a unit that consumers can understand - time. This allows users to make informed purchasing decisions and manage their usage better. Selling contracts in terms of minutes or hours is also a big step forward in user education.

Of course, another way around the KB/MB/GB pricing problem is to offer unlimited surfing packages.

India is now leading the way here too. For just five rupees a day (US$0.13) -- the cost of a banana -- Indian consumers can enjoy unlimited surfing. Pre-paid card users get an even better deal with AirTel - unlimited usage for just 2 rupees per day. Indian carriers have dramatically cut access fees to capture market share, enlarge the user base and attract high volumes.

Telecom operators in most other countries though punish low-to-moderate usage consumers. For a 10MB package, Bouygues (France) charges more than $36, AT&T (USA) - $25, O2 (UK) - about $20 and SingTel (Singapore) - $18.

Orange (UK) is heading in the right direction, though. They have priced their product to encourage surfing from the start and will do well to cap their prices close to current surfer friendly prices.

Check out our recent survey of telecom pricing across eight countries and 25 carriers.