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Mobile Pricing Innovation - The price of pricing

Innovation Reports - 15/07/2008 Mobile Pricing Innovation - The price of pricing

The price of pricing

There is a flurry of innovations in the pricing strategies of the mobile phone market, in particular the pricing schemes for the three most commonly used services: voice calls, SMS and data transmission. This IDATE report explains and reviews in detail the tariffs on offer in the consumer sector from mobile network operators, focusing primarily on Europe (France, Germany, Italy and the UK), the United States, Mexico, and Japan.


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Contents

Introduction



• mobile market saturation
• innovative pricing as a means of market survival



1. Pricing algorithm of a mobile subscription



1.1. Voice call pricing
• towards the single rate era
• pricing units applied to voice calls
1.2. Data transmission pricing
• a choice: charging by volume, charging by time
• pricing units applied to data transmission
1.3. Subscription methods
• post-paid
• prepaid



2. Different forms of pricing and funding innovation



2.1. Goals of innovative pricing
• to increase market share and ARPU
• to increase customer loyalty
2.2. The various flavours of "free"
• free, without payment: ad-funded calls
• free as complement to fixed payment
• Over-spending and under-spending on inclusive bundles
2.3. Unlimited offers
• unlimited voice calls
• unlimited text messaging (SMS)
• introducing the unlimited Internet (data transmission)
• unlimited Internet from a mobile handset
• unlimited internet on a mobile PC
2.4. Handset subsidies and pricing
• the iPhone business model
• choosing between subsidies or a cheaper tariff




3. Methods for implementing innovative pricing




3.1. Main tariff structures currently in use
3.2. Multi-branding strategy
3.3. Keeping it simple
3.4. Service bundling: double, triple and quadruple play
3.5. Fixed-mobile convergence
3.6. Home zone offer




Conclusion: the price of pricing

• What innovative pricing schemes are being deployed in the mobile market?

• Can pricing innovation towards specific groups lead to an increase in market shares?

• Innovation in pricing: an answer to acquiring/retaining subscribers and increasing their usage?

• Which lessons by countries: France, Germany, Italy, Japan, Mexico, UK, and USA?

• What are the potential impacts of innovative pricing on the overall mobile market?


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