Pricing 'sweet spot' still eludes carriers

Customers seem to have an increasingly bitter taste in their mouths from the new usage caps and overage fees they feel are forced down their throats by AT&T and other telecom and cable operators for whom they feel an increasing amount of distrust… or so it seems (CP: AT&T usage caps stir up controversy about metering accuracy).

Just last week, there was a heck of lot of noise in PC World and in Broadband DSL Reports about AT&T Internet usage billing, which some customers claimed has been “off” by as much as 4,700%. Though that is probably a gross exaggeration of one person’s experience and a misrepresentation of AT&T’s accuracy overall, there is no questioning that there is a problem—a disconnect—between what carriers feel is adequate communication and education about new pricing (and the reasons behind it), and what consumers feel is “just” and “right” in terms of the value they get for what they pay.

Because it is really a very small percentage of users that generate the most data traffic, it behooves operators to figure out sooner rather than later how to target those customers with these caps without disenchanting the greater whole of their user base.

The perception by consumers that they are being “punished” if they go over their usage limits even a few times is causing churn among otherwise valuable customers. That, of course, causes a loss of revenue that offsets any revenue gains from said overage fees.

The problem compounds itself if angry customers are “influencers” in their social and professional circles, as they then cause a domino effect of churn. Such influencers these days often vocalize criticisms on social networks and blogs,that are then picked up by different digital and print news wires, trade and public media, compounding the impact. Then a misquoted percentage of inaccuracy appears in a Google search engine dozens of times, creating a stir about something that possibly is an isolated incident.

While there is no confusion in the messaging coming out of carrier media rooms about investments in 3G and LTE, there is relatively little said about what changes are underway in OSS/BSS environments to ensure services are fulfilled, assured and billed in the most optimal way possible. After all, who would think any consumer would think OSS/BSS a “sexy” enough topic for anyone to pay attention to?

But if carriers manage to translate into more consumer-friendly terms the efforts they are making to not only make networks faster, but to make provisioning, billing and customer-care systems more accurate and robust, then perhaps there wouldn’t be so much distrust mounting about the accuracy of the metering of usage and the consequences in terms of caps and overage charges.

The multifarious mix of billing, charging and rating systems, as well as a hodgepodge of disparate analytics and policy capabilities, leads to a confused message about what operators have done or are doing to ensure they are doing what’s best for their customers—particularly their most valued customers.

Today, billing systems can give carriers analysis of what data has been historically used, but it seems they still struggle to predict usage patterns in real time or near-real time once data volumes and subscriber numbers explode. Understanding the usage patterns of different tiers of customers so that proactive actions can be taken to incentivize or de-incentivize certain users at times of peak usage and congestion is proving to be a very difficult task, no matter what the vendor community claims it can do with its “convergent, flexible, scalable solutions.”

It seems the time has come for operators to really get a handle on how much certain people (valued customers versus not-so-valued customers) are “going” to use services (in a predictive fashion) and then proactively offer promotions, discounts or incentives that sway the true “data hogs” (keeping in mind they can be profitable customers in their own right) to consume at hours of off-peak traffic or to pay premiums for a certain quality of experience even during peak hours. And, to simultaneously try and get more “average” consumers to branch out and use more services than those with which they are familiar so more revenue is generated across a greater breadth of customers and during a broader range of times during the day, week or month.

Usage-based pricing will, therefore, have to really be the result of the convergence of data analysis, assurance and monitoring, which then drives policy, charging and billing to more accurately identify valuable customers and the services they consume, as well as to predict their propensity to consume existing and new services at different times and locations (if at work, if at home, if alone or with kids, etc). Only then can operators find the “sweet spot” of compelling price points and promotions to get different tiers of users to consume what should be tailored services at optimal times.

There are billing, policy and assurance companies claiming to have the enabling technologies, but thus far, there is little evidence of their effectiveness in the consumer market, which can be measured by the amount of “noise” coming from individuals and consumer-advocacy groups. And right now, the “noise” is loud and not very positive.