Avoiding the mobile broadband 'Commodity Trap'

BOSTON, USA: As Mobile Broadband competition heats up, many operators are trying to gain share with aggressive price reductions. A new Strategy Analytics study examines alternatives that allow service providers to avoid the ‘Commodity Trap,’ where prices fall before operators can recoup their investment.

The Strategy Analytics Tariff Response Service (TRS) report, “Mobile Broadband is Not a Commodity - Premium Bundles can Maximize Revenue,” evaluates four service combinations at different prices for six countries – France, Germany, Italy, Spain, UK and US, which projects subscriber demand and revenue response for each scenario.

Scenario 1: Mobile Broadband service bundle at current monthly prices (with a dongle/USB device);

Scenario 2: 20 percent lower monthly price than Scenario 1;

Scenario 3: 20 percent higher monthly price (with a new data device); and

Scenario 4: 60 percent higher monthly service price with a bundled smartphone—and uncapped bytes per month.

According to Sue Rudd, director, TRS: “Subscribers in Northern Europe will purchase smartphones even at premium prices, whereas those in Southern Europe and US are primarily looking for discounts. In the long run, customer segmentation and combinations of key features that match different countries’ unique purchaser segments are essential in order to avoid the Mobile Broadband ‘Commodity Trap.’”