Monetization: A Family Affair

Posted by brwalsh on May 2, 2011 1:31:23 PM

With many Operators offering Tiered Pricing mobile data plans, some operators are also mandating that

users subscribe to a mobile data plan for any new smartphone purchases. In some cases, families are

resisting the costs of “per subscriber” data plans, and are deferring smartphone upgrades. This trend

could slow operators’ mobile data revenue momentum. Operators are considering a new type of "family

plan," a mobile data-service plan that covers multiple users’ devices, allowing the subscriber to purchase

a single bucket of bytes for sharing among family members. Similarly, these plans are of interest to other

value-conscious groups such as Small-to-Medium Businesses (SMB). Let’s call this the Family/Group

Data Plan.

A variant of that plan involves grouping devices rather than grouping users, i.e., a user with multiple

devices (e.g., smartphone + tablet) could have a single contract with a shared data quota across devices.

While similar in some sense to the Family/Group Data Plan, let’s refer to this variant as a Multi-Device

Plan. These 2 types of plans are likely to be offered in mixed combinations as they become more

prominent in the market.

Operators Like Family Values

In a custom Cisco-commissioned Heavy Reading study, based on a global survey of 50 operators, there

were interesting operator perspectives on Monetization, Optimization, and Video services. In this

research, Operators viewed Family/Group Data plans as the second most favored monetization use case,

in part because it will help operators drive incremental data penetration and usage. A Family/Group Data

Plan is viewed as a lower cost way for new subscribers to come onto the network, and a good value

service that will encourage loyalty and differentiation. This is the use-case that respondents thought the

most likely to achieve greater than 30% penetration, and that operators think has the best revenue

potential, with 36% saying it could generate $5 ARPU per month. The plan was also viewed as easily

understandable – important for pushing mobile broadband into the mass market. A group of 19

respondents from North America and Western Europe with revenue greater than $200 million were more

enthusiastic than average about this use-case, with 45% of them selecting a “more than 30%” penetration

rate for this service. In emerging markets, there was also strong interest in this offer because it had the

ability to attract multiple customers in one contract. Some mobile operators also believe that

Family/Group Plans would add interest in new LTE offerings and even help capture customers from the

residential DSL market.

Some operator Family/Group Plan examples: 3 Austria launched its 3PartnerCard which, for €3 per

month, gives mobile data subscribers a second USB data modem that can share the data quota of their

primary data stick. 3 Austria also offers 3 Data Pool which enables a corporate customer to subscribe to a

common pool of mobile data quota, from 3GB to 50GB/month, that can be used individually by company

employees.

Tough Love

Family Data Plans can also have a parental control feature if the operator gives parents the ability to

dynamically manage and allocate a shared data quota across family members. For example, a parent

might block mobile gaming services for a period of time for a child who isn’t doing well in school, so that

there is less distraction. The same capabilities can enhance “group” plans sold to businesses, where

there may be different categories of employees who could be permitted different mobile data service

privileges.

Multi-Device Plans

These plans enable the operator’s customers to share their data quota across more than 1 device. While

the predominant approach is for operators to offer subscribers separate mobile data plans for each

device, there is growing recognition for the need of multi-device mobile data plans, especially as tablets,

e-book readers, etc. are often considered as secondary devices by users. And as these secondary

devices typically support Wi-Fi connections, many users will forgo the cost of subscribing to a separate

3G or LTE data contract. Some analysts project that Apple is producing the iPad2 in a ratio of 3:4:3 (Wi-

Fi, UMTS, and CDMA/EV-DO, respectively), suggesting that the majority of iPad2 shipments are 3G

models. It may be that once the early adopter segment is exhausted, operators will have to more

seriously consider Multi-Device Plans to continue a high 3G or LTE service attachment rate for tablet

sales. And as tablets generate 5 times more traffic than the average smartphone (see Cisco’s Visual

Networking Index (VNI) Global Mobile Data Traffic Forecast), operators will want to monetize their data

usage. Operators also view the enterprise market as a segment where there will be demand for Multi-

Device Plans, e.g., 3G iPad and Android tablet users wanting to add the device to their corporate

smartphone accounts.

Multi-Device Plans are now appearing from some operators, e.g., for an additional €3 per month, Movistar

Spain’s iPhone Plus or Premium subscribers can get a 2nd SIM for an iPad sharing the same mobile data

quota. Such Multi-Device offers are also logically consistent with the direction that multimedia content

providers are heading in offering “any screen” access to users’ favorite services, especially premium

video content.

This “Any Screen” trend leads to an interesting question: will the ability of the operator’s intelligent

network to manage a user’s data quota across multiple devices – possibly along with the capability to

optimize formatting and display of such content – provide additional opportunities for operators to forge

partnerships with content providers?