While it was quite therapeutic to rant about my Internet Provider, it got me thinking about how limited the options my provider has in terms of providing and pricing a service to me as a consumer and leads me to part 2 of this article.
Data has a cost, no matter how you package it. Every network whether fixed/mobile, LTE/WiMAX/5G etc., provides a specific capacity for a fixed investment plus ongoing maintenance cost. This can be expressed as a cost per Gbps, and it is this that the provider uses to price their service (together with some form of margin).
Everyone talks about the need for simple pricing, and this cost is ultimately translated into one or two monthly subscription variants that essentially appeases the biggest minority, typically those that just want simple web browsing and email access and don’t want to pay over the top. These pricing options are a very blunt instrument when trying to extract value out of an asset, a problem which will only be compounded as mobile providers start rolling out new 5G services.
Every consumer is different in terms of their usage and thus there are many pricing levers which can be adjusted to price a service, for example:
- Backhaul Capacity – Bandwidth available out to the wider Internet
- Last Mile Access Type – LTE/WiMAX/Phone line
- Contention Ratio– How many people using the same infrastructure
- Quality (QoS)– Reliability of the data session
- Customer Care Agreement– Digital Care/Phone support/Premium support
- Time Used (peak/off-peak)– Varying rates depending on time of day
- Availability – Redundancy options/Failover
- Download Allowance– Typically unlimited for fixed connections but limited bundles for mobile
- Free Content – Specific content/Applications which are always free
- Contract Length – Discounts for longer agreements
- Bandwidth/Latency/Quality of Service – Network slicing with 5G Services
As a basic level consumer, you might pay a minimum amount to get connectivity enough for occasional email and web surfing. The other extreme is a business user who would be willing to pay more to get the highest download speeds, minimum contention and premium support to allow true remote working. If I look at myself, I am constantly knocking on the doors of all the providers in the region crying out for a business quality connection and yet no one is able to offer it. One conclusion is that is that they are unable to price such an offering and so aim cheap, which ultimately means a connection on a best effort basis.
If you take the eleven pricing levers/dimensions shown above, you could have a specific combination of each dimension for every subscriber so everyone has their own personalized agreement with the operator. A traditional BSS approach to Telco billing would never cope with the processing required, hence why it has not been popular or cost efficient to offer. Think though, if an operator could tweak the various pricing levers in real-time or let their subscribers change their options with a swipe of a finger on a mobile app, there is enormous scope to truly utilize the network assets in this scenario.
Other industries do this really well. Take a look at hotels or airlines for example. They price according to demand to encourage take up when there is low utilization and to maximize revenue at peak times.
So, What Can be Done?
Pricing usage of an asset needs to be carried out in real-time, giving the subscriber complete visibility and transparency over not just what they have been charged but also over what they could be charged. For example, I would like 50Gbps unlimited bandwidth for the next hour. How much will that cost me right now given that it is 2pm on a Wednesday afternoon and the network is heavily loaded? The problem with pricing scenarios like these is that they have been traditionally solved by a BSS system using a sequential process that doesn’t allow for very much flexibility i.e. if bandwidth is “w” and if contention is “x” and if duration is “y” then price is “z.” For the ten pricing dimensions above this leads to a long and unpredictable code path or IFTTT on steroids because every scenario requires pre-configuration! The impact on the business is a pricing model that is unmanageable and impossible to change without extensive regression testing and the consumer impact is one of an unpredictable experience. Now just imagine trying to implement this sequential approach to variable pricing across 5G Network slices and it should be enough to make you want to quit the internet all together.
A Simple and Flexible Solution
MATRIXX is ideal for solving these pricing scenarios as it does not use a sequential IFTTT model but instead all the pricing combinations are evaluated using an internal linear vector algebraic formulation that provides the result in a predictable and easy to manage manner. Of course, you don’t have to be a mathematician to use it; the pricing is exposed as simple excel like tables, making updates simple. The result is an extremely fast and predictable pricing engine that works just as well for complex multi-dimensional pricing scenarios as it does for simple subscription charging. For the operator it allows subscribers to create tailored offers based on their needs rather than the needs of a legacy charging system and it provides an opportunity for the operator to sweat their existing assets by charging based on demand and ultimately providing a better service.
Imagine the following scenarios:
- A holiday home user could pay a basic connection charge and then set the bandwidth they want on an hourly or daily basis
- If a consumer has friends over they could temporarily boost their bandwidth for the evening
- A business user could elect for a high QoS plus premium support
- Promotions could be pushed to users to incentivize evening and weekend usage when congestion is low
- Restaurants and local businesses could sponsor connections, for example watching a promotional video could give you credit towards your tariff
No longer does the network need to produce a fixed revenue stream thus limiting the level of service the operator is prepared to provide. Now, there are hundreds of possibilities of utilizing the network efficiently to generate additional revenue. This leads to operators being able to innovate and distinguish themselves from their competitors rather than simply competing on the lowest subscription price. It prepares them for the inevitable increase in pricing complexity that is coming with new 5G Services. It may even help me get a business grade Internet service whilst in Spain – not to mention reduce my ranting and thereby, self-induced stress!
Learn more about how MATRIXX Digital Commerce unlocks the true potential of 5G.