The consulting firm Deloitte centers its latest edition of "TMT Predictions", an annual analysis of the major trends in technology, media and telecommunications, mainly on mobile services and technologies this time. Since smartphones will dominate the markets, the marketing strategies of providers have to change and differentiate and one of the possible differentiation potentials for network operators could be so-called "all-you-can-app" rates, which Deloitte attests significant potential.
Actually, the consulting firm predicts that in 2013 between 50 and 100 mobile operators will offer all-you-can-eat services with unlimited access to specific applications. All-you-can-app (AYCA) will, for a fixed monthly subscription, offer unrestricted use of each service’s content, with connectivity charges bundled in. Over the course of the year the portfolio of AYCA services available should grow and pricing will likely range from zero to tens of dollars per month, with the price indicative of the content’s value and data volumes. AYCA services will complement existing data tariffs.”
In addition, Deloitte believes, that AYCA services will be aimed primarily at customers interested in, but hesitant about, mobile data usage, due to worries about running up large data charges this year. These will mostly be the hundreds of millions of users currently migrating or recently migrated to smartphones. Besides, it is expected that AYCA may be popular in countries with low income levels, where they will aim to stimulate usage of mobile data services.
AYCA is a middle ground between unrestricted all-you-can-eat tariffs and metered data charging. All-you-can-eat is attractive to consumers but unpredictable, and occasionally rampant usage has made the offer uneconomic for some operators. Metered usage enables carriers to charge according to network impact, but inadvertent usage can land subscribers with unexpectedly high data bills. Thus, a fundamental challenge of metered billing is that it requires subscribers to know the file sizes of digital content they want to download. However, the size of a digital file is not always obvious. Consumers are familiar with CDs and DVDs: they look the same, are of similar size and a CD album plays about half the time of a DVD movie. However consumers may not realize there is a thousand-fold difference in the size of a compressed MP3 track, which is typically a few megabytes (MBs) and an hour of high-definition video, which can be many gigabytes (GBs).
Operators are likely to be eager to introduce AYCA tariffs to encourage more of their subscriber base to use mobile data services. Data revenues are needed to counterbalance declines in mobile voice, SMS and roaming revenues. But a large proportion of smartphone owners do not appear to use data services. By year-end 2013 about 400 million of the 1.9 billion smartphone installed base may never or only rarely (less than once a week) be used to connect to the Internet. However, it is expected that this year and over the medium term, a large proportion of the four billion mobile users still using feature phones may upgrade to a smartphone. So, AYCA may just fit the bill. Among 15 countries surveyed in a Deloitte study, between 29% and 54% of smartphone owners would like to have unlimited access to services they use most (see Figure 1).
Figure 1: Smartphone owners that would prefer to subscribe to a package which would give them unlimited access to services they use most, by country.
Source: Deloitte Global Mobile Consumer Survey, May-June 20126. Sample: Respondents who own a smartphone and use the mobile network to connect to the Internet (all countries, 5,398 respondents)
Deloitte’s research indicates that the most popular AYCA services would likely be for social networks, email, video and Instant Messaging (IM) services. Facebook was ranked the number one most desired service in 12 of the 14 countries surveyed – with Russia and Japan the only exceptions. YouTube was second most popular, being ranked number one in Japan and number two in five countries. WhatsApp (an instant messaging service) and BlackBerry Messenger were also among the most popular services. Deloitte expects the range of AYCA services offered to steadily become more diverse over 2013 and beyond.
Operators are likely to partner with existing third party companies to jointly offer AYCA services, as well as create their own. For example in India, Reliance offers unlimited access to WhatsApp and Facebook for Rs16 ($0.30) per month. Some operators offer unlimited access to apps when roaming. Hong Kong firm 3 offers unlimited access to WhatsApp for around $6 per month while roaming and Telkomsel Indonesia offers optimized access to third party voice over Internet Protocol (VoIP) services.
Operators are also likely to offer AYCA music and TV services, which are more data intensive. In Thailand, Malaysia and Singapore, online music service Deezer Premium + is available for a fixed fee with connectivity charges included. In Germany, Deutsche Telekom has teamed up with Spotify to offer a €10 ($12.88) service that bundles unlimited access to music with inclusive access charges. As for TV, Vodafone in Spain and Greece is offering unlimited access to a range of TV channels for €1.77 ($2.28) and €2.46 ($3.20) respectively per week. Most probably some operators and operator groups will even offer AYCA services for free for a limited period to stimulate usage.
The fact is that confusion over data pricing benefits none of operators, consumers or content creators. While initial data users may have had a reasonable understanding of file sizes, mainstream users are more likely to get bill shock through inadvertent downloads of large files via cellular networks.
It is a good time to introduce AYCA, says Deloitte. The majority of mobile customers have yet to move to smartphones, and predictability in pricing should provide sufficient reassurance to try out mobile data services. Further, the technological tools needed to deploy AYCA are increasingly economically viable – for example the cost of deep packet inspection (DPI) technology falls every year, due to Moore’s Law.
Of course, AYCA will not suit every customer or every carrier. Heavy users may prefer unrestricted all-you-can-eat packages, where available, and figure out for themselves which services to use each month. Business users may prefer metered packages. Carriers should offer the range of data tariffs most suited to their customer bases. In a few markets, AYCA may not be the right approach: rather offering differing tiers of unlimited usage but at different access speeds may be considered the best approach, but time will tell. (Source: Deloitte)