The unlimited data plan has become a paradox unto itself. While nearly every carrier, large and small, touts some sort of “unlimited” offering, savvy consumers have quickly learned to read between the lines. Unlimited doesn’t really mean unlimited, where data is free flowing with no end in sight, it just means customers aren’t charged overage once they hit a preset limit. Instead of overage charges, customers experience is downgraded via throttling of data speeds, particularly in high-traffic areas.
These one-size-fits-all plans have become the industry’s compromise as mobile providers try to figure out how to compete on something other than price. Dig a little deeper however, and problems loom on the horizon. In an increasingly video-centric world, with 5G on the horizon and the technological advancements that will come along with it, the demand for data continues to increase exponentially. Unlimited appetites will not be satiated for long.
Communication Service Providers (CSPs) have a critical decision to make. Continue to compete on price alone, or clearly distinguish their offerings through customer-centricity. Can they ingratiate users to their brand rather than the bill? Is there a place for truly unlimited offers once 5G networks are fully operational?
Unlimited as a Strategic Advantage
In a very tangible way, some of the world’s leading CSPs are relying on the demand for data to significantly impact revenue growth. And they are not doing it by competing with unlimited offers and driving prices to the bottom.
Gartner’s June 2018 Market Insight report highlights both the top five and bottom five mobile service providers around the world, based on a comparison of year-over-year 2017 revenue growth. Two of the top five providers made calculated decisions to direct unlimited and specialized data plans to their high ARPU users only, actually increasing the price of those plans but realizing greater revenue returns. Instead of blanketing the market with a single, sub-par offer – unlimited is targeted at premium customer only. These operators then used other pricing strategies, such as bundled discounts, to successfully serve lower ARPU segments of the market.
What Gartner extrapolated from its findings is that CSPs, seeking to increase revenue growth, should exploit the rising demand of data by introducing highly targeted, innovative pricing strategies and feature offerings. With this approach, those that want unlimited might actually be able to get it, without being throttled or having to top up.
Adjusting the Unlimited Expectation
As operators well know, all bandwidth is not created equal. Even with pending 5G rollouts, access to data speeds can be contingent on a variety of factors. Equally, all mobile users are not the same. Not everyone requires or is willing to pay for unfettered, unlimited access to data. Offering more transparent insight into the amount of data an individual uses will help them better assess the type of mobile plan they need, and research shows they’re willing to pay for it.
Innovative operators and new market entrants who have embraced a digital-first approach are already pushing ahead towards this more valuable data monetization strategy. Examples include offering up-sell opportunities for higher bandwidth, data packages designed around an individual’s specific app usage, and real-time access to data use so customers can make changes to their plans that accommodate their immediate needs.
That doesn’t mean there isn’t a place for unlimited. Tailoring unlimited offers toward the highest-value users and specific entertainment packages such as gaming or virtual reality, enables a new level of personalization and benefit for the individual. These users have proven that access and speed trump costs, opening the door to building greater customer loyalty by providing unique opportunities to meet their needs. Conversely, lower-use customers also derive better value by only paying for those things they use, building greater trust and satisfaction.
The CSPs who will rise to the top in today’s razor-thin competitive landscape are those who set aside reactionary price wars and instead embrace differentiation. Unlimited offerings have the potential to deliver true value to the operator, but only when used as a strategic asset and not a one-size-fits-all compromise.