By Hisham Isa, Vice President (Marketing)
Fact #1: Carriers have discontinued unlimited mobile surfing packages in many markets.
Fact #2: Mobile surfers are spending less time online.
Surprised?
Less consumer time online means missed opportunities and potentially lower revenues for all sorts of mobile players, from advertisers to publishers and merchants.
We are seeing creative attempts though - mainly in the form of partnerships between telecoms and Over-The-Top (OTT) players like Facebook and Google - to counteract this trend and encourage more surfing. To really be successful though, carriers need to look beyond a few big-name brands and embrace mobile merchants as well. At the same time, they should take a fresh look at pricing plans to make them clearer and more predictable.
Let's take a closer look.
Mobile Usage
According to the latest BuzzCity survey -- conducted over the last two months of 2013 among 19,000 mobile users on four continents -- most surfers are spending less time online. Take a look at the graph below and you'll see that the only increase is among light surfers, those who spend less than 30 minutes a day on the mobile internet.
The proportion of light surfers jumped from about 1 in 5 a year ago to nearly 1 in 3 now.
While some of the rise in short-time usage could be due to new users coming online, our experience shows us that data costs are the biggest factor.
Some carriers have eliminated unlimited data packages altogether; others are implementing 'fair use' policies that allow them to choke connections after a certain level of consumption unless consumers pay more. In the US, for example, one carrier advertises pre-paid packages with a 4G connection, but after 500MB, speeds are slowed to just 2G (like a dial-up).
To some extent, we understand that carriers feel pressure to raise prices so that they can invest in next-generation connectivity. But it's more than just price levels that are dragging down mobile surfing; it's also the unpredictability of monthly charges.
After several years of clearly communicating price plans and putting them in terms that consumers can understand, the industry seems to have regressed to the landscape of 2007-2008. Carriers offer a confusing choice of pricing schemes based on data usage -- often with variable costs per GB, even though the cost to carriers should be the same for the first first GB and last GB served -- and at the end of the month, consumers often find their bill to be different than expected.
A call needs to be made again for straight-forward mobile plans with predictable pricing.
After several years of clearly communicating price plans and putting them in terms that consumers can understand, the industry seems to have regressed to the landscape of 2007-2008. Carriers offer a confusing choice of pricing schemes based on data usage -- often with variable costs per GB, even though the cost to carriers should be the same for the first first GB and last GB served -- and at the end of the month, consumers often find their bill to be different than expected.
A call needs to be made again for straight-forward mobile plans with predictable pricing.
Over-The-Top
To encourage surfing and entice new users online, many carriers are offering 'free' surfing on popular sites.
Google has tied up with carriers in five countries -- India (Airtel), Nigeria (Airtel), Philippines, (Globe), Sri Lanka (Dialog Axiata) and Thailand (AIS) -- to offer "Free Zone powered by Google". Consumers can use Google search, check gmail and Google+ without incurring data charges, up to a certain limit. The initial search links are free, but click beyond that and you'll be charged. Carriers put up a warning and sign-up plan first, though, so consumers are never caught by surprise.
Facebook launched free surfing agreements with some 50 operators in 45 countries in 2010 and since has added many more including most recently Airtel Uganda and the US, where T-Mobile's pre-paid brand GoSmart has started offering free access to Facebook and Facebook Messenger. Even embedded videos can be watched at no charge, as long as the user does not venture outside the social media platform.
In both cases, the carriers likely receive payments from their OTT partners in exchange for marketing. The funds then offset some or all of the bandwidth costs. Plus, as soon as consumers venture off the free platforms, another revenue (and data) stream opens up.
Expanding the Box
Over the coming months, expect to see carriers announce more free surfing bundles with top brands. However the telcos should think more broadly and launch similar tie-ups with merchants and payment partners.
Encouraging m-commerce is a win-win for everyone involved:
- Consumers see value in being able to do more online.
- Merchant sales increase.
- Advertisers experience increased exposure.
- And carriers make money from increased usage of pre-paid cards, premium SMS and one-click operator billing. Plus, the act of buying online uses hardly any bandwidth, so the cost to carriers is minimal.
Let's hope telcos see the light.
