Jonathan Jensen on Thursday – Thinking about mobile tariffs

Recently I’ve been canvassing opinion about tariffs. I asked the question ‘How many mobile tariffs meet the basic tenets of simplicity & predictability?’ Every answer I received was ‘none’, which got me thinking. What should tariffs look like and is anyone offering ‘customer friendly’ tariffs yet? Mobile tariffs expect customers to guess what their usage will be. If you over-shoot it costs a fortune, if you under-shoot you’re wasting money.

New service providers in the market are starting to provide a glimpse of what true convergence can deliver and this is starting to simplify tariffs. The distinction between fixed and mobile communications is becoming increasingly blurred in the market, with VoIP allowing service providers to offer simple inclusive tariffs as a key part of the customer value proposition. The simplicity of these propositions allows them to be offered to customers worldwide and not just within narrow territorial boundaries.

From a customer perspective, choice of tariffs is a balance between giving the customer the choice to identify the most appropriate tariff for their needs and confusing the customer through too much choice. Whilst per call charging may suit the occasional user, heavier users want certainty and predictability in their bills. A flat rate monthly charge that covers all calls to landline and mobile numbers worldwide is the most desirable tariff for heavy users (unlimited calls would of course be subject to a fair use policy).

The options for flat rate models can include worldwide, in-country or in-region, e.g. Europe. Including mobile calls in the flat rate tariff is desirable because for many customers, mobile numbers make up a significant proportion of their calls and without mobile numbers the element of certainty is lost.

An innovative approach to tariffs allows the customer to build their own package based on selecting the options they require. The selected options generate a monthly charge specific to that user. For example, a customer could select flat rate calls within the UK, plus flat rate calls to the US, plus data, plus three geographic inbound numbers for the UK, USA East Coast and USA West Coast. This puts the customer in control of their own service package and therefore charges. The customer sees the value from a service tailored to their own requirements and for the service provider it provides the opportunity to increase ARPU by offering the customer additional services which can be added to their base tariff.

Whilst the economics of the VoIP market are different to the cellular mobile market, we are starting to see tariffs from the new service providers that are not ‘designed to confuse’. What we need now is for a mobile operator to take the plunge …

The ultimate test for any tariff is to test it against the customer experience. Is it simple? Will the customer understand what charges they will incur? Does it give the customer certainty and predictability in their expenditure? For an example of how not to do it look at charging for data by the MB. What does a MB mean to a customer? Nothing!

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Jonathan’s also at Sevendotzero.