Friday, February 3, 2012

Mobile Data Pricing, Packaging is Key to Profitability

LR-58455-EX02.jpgVodafone's recent experience with mobile data traffic has lessons for other global operators.

Among other key trends is the growing role played by smart phone users and the ways traffic shaping can improve experience.

Also, smart phones are proving to be a key revenue driver, so plans tailored for the different behaviors various consumers have, can lift mobile Internet access demand. 

The focus for Vodafone’s price innovation is squarely on smart phones because this is the category of device that is driving data revenue growth. 

In fact, it now is possible to clearly delineate usage of PC dongles, long the main driver of mobile broadband use, and mobile Internet revenue growth driven mainly by smart phones.

Comparing the financial year 2010 to 2011 with the prior year, Vodafone’s mobile Internet revenues increased by 56 percent. This compares with growth of only 14 percent in mobile broadband. 

That's a significant change, as 10 years ago most "data revenue" was contributed by use of text messaging. 

LR-58455-EX03.jpgTiered pricing is also a prominent feature of Vodafone’s current mobile data pricing strategy. The company is introducing price plans tailored specifically to the needs of low and medium data users. 

Careful traffic management will continue to be an essential piece of the data profit puzzle. 

Vodafone has implemented Web and video optimization in nine of its European markets. 

That is one reason why many argue that network neutrality rules are harmful in the wireless domain. Wireless networks are much more susceptible to congestion than fixed networks, in part because demand varies much more than on fixed networks.

It is far easier to engineer a fixed network in part because usage patterns tend to be stable over time. Mobile users can, from time to time, dramatically change demand at specific cell sites.

The company claims optimization has helped it achieve data volume reductions ranging from 15 percent to 30 percent. Vodafone has also seen a reduction of 20 percent to 30 percent in peer-to-peer traffic in some of its European markets.

Offload of traffic to Wi-Fi networks also will play a part in  managing consumption. 

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