Ovum: LTE Operators' Service Pricing Plans Lack Innovation, Sustainability

[Satellite TODAY Insider 08-02-11] Independent telecoms analyst firm Ovum has released a 4G LTE pricing analysis report warning network operators that some of their proposed high-speed mobile broadband technology service offerings lack innovative pricing models.

The report, issued Aug. 1, studied LTE pricing strategies of operators in Europe, Asia-Pacific and the United States. Ovum Senior Analyst and author of the report Nicole McCormick said that in her findings, unlimited LTE data plans presented significant problems when accompanied by a lenient fair usage policy.

“We were disappointed with our findings,” McCormick said in a statement to Satellite TODAY Insider. “LTE provides operators with the opportunity to experiment with new and innovative pricing models, which allows them to find the best way of deriving revenues from the premium service. However, there is a lack of new and innovative LTE tariffs [in the current plans], which is a missed opportunity for operators given that LTE is a new service in the eyes of consumers.”

According to Ovum, regional LTE tariffs dominated by unlimited offerings and large data buckets can be problematic for companies looking to form sustainable business models. The report also found that charging high premiums for LTE is unsustainable in the long-term due to competitive pressures in the industry and increased migration to 4G services.

McCormick noted that some future LTE operators, such as Verizon Wireless, SK Telecom, NTT DoCoMo and LG U Plus have moved away from unlimited LTE offerings despite including such packages in their third-generation services.

“Operators should not offer unlimited LTE tariffs without some sort of deterrent as they could have an impact on the quality of the service given LTE’s data-intensive nature,” she said. “Operators also will need to be careful not to alienate high-end customers that have paid a premium for a fast, high-quality service by reducing LTE tariffs too quickly or drastically.”

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