“… to do the right thing – after they’ve tried everything else,” said Winston Churchill, using the quote version from the National Churchill Museum. A paraphrase seems most applicable to European mobile telecom policy and pricing, “You can always count on the European Telecom Operators to do the right thing – after they’ve tried everything else.”
As the EuroTelcos roll out 4G, they largely pursue a strategy that to date remains parked in neutral. They have the 4G motor on, revving it up and making lots of engine noise, but haven’t found how to get any traction. No one need pass judgment on the wisdom of GAPP (Generally Accepted Pricing Plan, not the American GAAP) but simply compare the fruit it bears. The GAPP for EuroTelcos is premium pricing for LTE, which comes from an inward marketing gaze rather than from a market driven perspective. Since EuroTelcos have to spend to deploy 4G, subscribers should pay a premium, so they reason.
But one should compare the status of PP4G (Premium Pricing for 4G) in Europe and SP4G (Same Price for 4G) in the US: mass-market uptake of 4G in the US, even with the Sky-High tariffs, compared to Euro markets. When 4G is presented properly, it is truly one of those things that “If you build it, they will come.” Subscribers will indeed pay more because of increased consumption and moving to higher data quotas. Q.E.D.
But operators can change and PP4G strategies will fall by the wayside. 3, Free and Vodafone (in some markets) have finally found how work the 4G clutch and shifter, so it’s off to the races, meaning no additional tariff for 4G. Meanwhile, the competitors rev their engines louder and even bring in politicians for a home-field cheering advantage.
A different analogy also applies. The EuroTelcos seem to think that a Gigabyte consumed with fine LTE Pinot Noir demands a higher tariff than the same Gigabyte consumed with 3G Two Buck Chuck. It might be the same YouTube cat video you are watching, but it’s worth more when you watch it with the 4G Pinot Noir, so they think.
They are right in that 4G Pinot Noir really is better than 3G Two Buck Chuck. But pursuing this approach narrowly segments their target market, while more money is to be made by targeting the mass-market segment. Mass-market subscribers will use it, like it, and buy more when it is priced properly. Rather than see LTE as a precious reserve vintage, EuroTelcos should simply listen to the market, pivot, and deliver the Two Buck Chuck. Then it’s off to the races – after they’ve tried everything else.
BTW, I do not advocate drinking and driving, as here the operator both serves and races, and not the imbiber.