Carriers and their Customers Could Benefit from a Different Business Model

by Reads (3,405)

One of the questions that has come to me a number of times lately has been “How do I save more on my mobile bill? It’s getting out of hand.”

After a great deal of searching, I’ve come to a realization: there aren’t many options out there in terms of taking a more cost-effective approach to mobile computing.

However, I do think that carriers could re-think their business models in a way that would help customers in this search for more value, while at the same time keeping their interests and revenues in mind.

The Ideal Mobile Shopping Cart
Ideally, it would be great if there were two main ways to shop for mobile services and features. I’ll use a familiar analogy of food services to make my point.

Fast Food

There are times when you just need a quick bite. You’re hungry right now, and you’re in a spot where more significant shopping isn’t something that you can do at the moment. So you go to a fast food place. There you have a limited selection — compared to a full outlet store — but what you can get fits the need.

So think of the same thing with mobile services. You have a suite of services, common to each carrier, but a small collection of them that you can purchase and use — without a contract — in small chunks. For example, you have a phone, but you need a bucket of minutes since this will be a heavy month. So you contact the carrier and their fast food joint enables your SIM with those minutes. And after that, you’re done. No questions for more service, and no overages — just enough to fill your stomach.

Bulk Stores

Then there are times when you need more than a quick bite. You are looking ahead and will use a trunk full of food items to tide you over for a long time. There are many of the same foods that you find in a fast food place, but how they are prepared is up to you. And there’s an option to join that bulk store’s club for further benefits and savings.

So back to mobile services. Instead of purchasing from a temporary-use, smaller bucket of services, you have an entire library available to you. However, because this is a bulk store, services are sold to you in bundles, with a contract option that enables additional services. Here you’d see the familiar subsidies and contracts, but you’d have the option of service without them. Here’s where your family and enterprise plans would lie, and due to your affiliation with the service provider, additional perks happen.

Relevance to the Carrier
Giving these options creates a bit more of a data hassle for the carrier. Instead of them having just one store with current service bundles and contracts, they are doing two stores and offering what could amount to more possibilities for customer confusion. However, I think that this kind of model not only works for carriers, but makes them look better in the eyes of consumers.

For one, the marketing for carriers would then be able to point towards a “pick your feature” model versus the traditional bundle model. They wouldn’t be getting rid of the bundle model, and keeping it alongside a second option would come across as nice gesture to those who need it. But for those who’d like to pick and choose, choice causes freedom.

What this also does is encourage users to shop better for devices. Yes, this might mean that more people would seriously consider an unbranded/unlocked device — but within that bundle model you’d have the compelling pull of a subsidized model.

Lastly, people would know exactly what they are paying for. No more of that “charge everyone the same whether they are on contract for not” stuff. No, people would not only be able to shop smarter, but the competition between carriers would cause prices to stay at a manageable level.

What this Could Look Like
Let’s take an example: I have a smartphone and I would like to have just a data plan and SMS. The SMS would require a mobile number, so there’d be some type of activation fee that I should expect for that. Beyond that though, my only imprint on the carrier’s network is the data plan (for IM, email, and VoIP — possibly also offered by the carrier) and the SMS.

That’s not possible right now. I’d have to have a voice plan of at least $40 before I could even think of looking at an SMS plan ($5 minimum) and data plan ($15-35).

If I could choose my package, that would be 50% of what I’m paying now (and usage taxes to boot). The carrier would still get its revenue, I still get to communicate, and the network gets used. That’s a win-win for carriers in my book.

While I’m pretty sure that they’ve already run the numbers repeatedly on doing something like this, I think that this kind of model for offering wireless services not only could work, but it would enable carriers to better keep their hands on the pulse of consumers who are tightening things up in these times. Their high profits won’t last forever, and people will either find something better or ditch cellular mobile completely. Those aren’t good odds to bet against in light of what is now of greater interest to consumers’ wallets.

 

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