4G pricing models failing to entice users

By Dawinderpal Sahota
01 Aug 2011 View Comments
Outside the Mobile World Congress 2009

Mobile operators that offer 4G (LTE) technology are failing to deliver innovative pricing models, according to a new study.

Analyst firm Ovum argues that mobile operators need to entice consumers with new and innovative 4G LTE tariffs.

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"We looked at the LTE pricing strategies of operators in Europe, Asia-Pacific, and the US, and were disappointed with our findings," said Nicole McCormick, senior analyst at Ovum.

"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, most operators have not grasped this opportunity."

She added that, instead, the LTE tariffs are dominated by unlimited offerings and large data buckets, which can be problematic, especially if they are accompanied by a lenient fair usage policy.

"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," said McCormick.

The report also found that charging high premiums for LTE is unsustainable in the long run, due to competitive pressures in the industry and increased migration to 4G services.

"Operators 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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