The uptake of LTE services across the globe is gaining momentum. The Global mobile Suppliers Association’s (GSA) ‘Evolution to LTE Report’ released in September 2012 showed there are currently 96 commercial LTE networks in operation, set to grow to 152 by the end of the year. Devices with LTE support are coming out in a steady stream now, and while handset manufacturers and mobile operators work out the interoperability challenges, Far Eastern operators SK Telecom and CSL Hong Kong have already announced the first international roaming agreement. International LTE roaming is coming.
LTE Pricing and Bill-Shock Prevention
CDMA and GSM carriers around the world have recently made tremendous headway in establishing an environment that protects subscribers against bill shock on GPRS and 3G. These efforts must continue with LTE roaming. The increase in mobile data speeds will result in a need for more granularity with regards to roaming download thresholds and pricing transparency.
Central to providing this clarity is price setting, which can be an experimental process during the first stages of technology adoption. It is easy to presume that consumers who feel under-served by HSPA+ would be willing to pay more. However, from a practical point of view, consumers – as with the shift from GPRS over EDGE to 3G/HSPA – will struggle to understand the difference between the networks and the resulting difference in price when roaming. Wholesale roaming prices look set to stay the same across the access technologies, reflecting that the majority of costs relate to bandwidth and signaling between networks.
Making understanding a priority
If retail pricing across 3G and LTE is to remain the same, new equilibriums between data consumption and pricing need to be found. Central to communicating LTE roaming costs will be offerings of data packs, which are currently popular with mobile users. These offerings can be sold to provide subscribers with options that ensure a certain price or data threshold is not crossed, bringing peace of mind in the process.
While roaming packs are currently for subscribers using 3G technology, the price and data structures available may not be a direct fit with LTE, due to the increased amount of data that can be downloaded onto a device, as a result of the much faster connection speeds.
In order to maintain a high level of granularity, operators must keep subscribers well-informed about their data consumption while travelling through SMS or web-portals that frequently remind them of their usage. While appreciating that downloading such things as emails is faster on LTE, subscribers might want to throttle their speed or restrict downloads to non-video to stretch the consumption over longer time periods.
Alternatively, operators can offer consumers differentiated pricing, enabling them to make a conscious choice of whether they want to roam on only 3G or LTE networks. If carriers ensure fast roll-out of LTE roaming coverage in the most important roaming destinations then this is a viable option and might help maximise revenues by selling that exact data roaming pack at any value – regardless at how much the customer is willing to spend.
Thresholds and different networks
Operators might need to rethink their approach to setting bill shock thresholds in networks with different data capabilities. What if subscribers could define different thresholds and alerts based on whether they visited a 3G or LTE network? The use of throttling to step down download speeds when certain thresholds on LTE are reached, should be considered to protect subscribers against reaching their bill limits too fast and subsequently feeling as if they have been undersold or misinformed by their service provider.
As LTE networks are still in their infancy and roaming is not yet commonplace, there is still no right or wrong approach to billing for this service. With time, this will become clearer. In the meantime, a selection of different offerings, such as day or week data packs, throttled speed services and service awareness tools, must be offered in order to promote an understanding of LTE usage among customers, as well as continuing to keep their trust.
New services over LTE
While ensuring customer clarity around LTE services is a priority, its ability to run an array of services, such as VoIP solutions, will also open up new doors of opportunities for operators. It is worth noting that while many subscribers will be cautious about overspending, some will be happy to pay almost anything to be able to keep in contact with friends and family and will use the LTE networks abroad at local pay-as-you-go rates in order to do this.
However, some consumer segments will only address their bare needs when abroad. What if operators could offer these subscribers a lower-price data pack that gives access to only certain types of services, like instant messaging or face to face video calling for example? This would allow mobile operators to define the right retail packages and open up new revenue streams.
The increased use of services such as VoIP solutions and video over LTE will also present operators with a new problem, namely an increase in data traffic. Currently, all data traffic is routed from the visited network back to the home network, ensuring a virtual home experience where subscribers will get access to the same content as they would when at home. However, downloads from certain video streaming sites do not need to be downloaded via the home network. Can we optimise the backhaul load and eventually ensure optimal consumer experience by using local-breakout of certain types of data traffic? Yes, it is certainly possible, and something that we will see used increasingly as the load on networks pick up as LTE-roaming agreements roll out.
LTE roaming is coming to a network near you. It is time to finish the plans for the commercial roll-out of LTE roaming. This is vital, not only for the market to grow and adjust, but for the full benefits of international LTE roaming to be reaped.
Tue From Hermansen, Director of Mobile Data and Advanced Networks, MACH