Basic Pricing Structure: Flat Rate or Price/Minute
There
are two basic approaches to pricing actual service usage when
subscribers are in their Home Zone: (i) offer a discounted
per-minute rate or (ii) offer a flat-rate usage plan.
To date, nearly all operators worldwide have chosen to
structure their HZ2.0 offers as flat-rate service plans.
Operators see HZ2.0 services as a good way to introduce
flat-rate plans without sacrificing the value of the macro mo-
bile network. It enables operators to limit flat-rate usage to
specific locations (e.g. home and office).
Target Service Price
Flat-rate pricing of an HZ2.0 offer
can be used to advance an operator's strategic objectives in a
particular market based on the operator's relative position as
incumbent or challenger.
The marketplace has seen challengers being aggressive on
flat-rate pricing from the beginning, with the goal of driving
increased ARPU and minutes of use, as well as acquiring new
mobile subscribers.
T-Mobile US, for example, introduced HotSpot @Home
with unlimited flat-rate calling for a low $10/month. Orange
UK's Unique offer is free for subscribers with service plans of
£30/month ($60) or more.
Alternatively, incumbent providers often choose to start with
a relatively high flat monthly rate. For example, Orange's Unik
service in France has an initial monthly price of 22/month
($30US) and is crafted initially to increase loyalty and drive us-
age from existing Orange mobile and broadband subscribers.
Access Point Distribution
HZ2.0 services rely on a low-
power access point in the home. For a DMH service, it is a
Wi-Fi access point. For a femtocell service, it is the femtocell
itself.
In a femtocell offer, the operator has to provide a femto-
cell to be installed in the home as part of the service. In the
case of a DMH service, it is not required for the operator to
provide a Wi-Fi access point as part of the service offer, as
many broadband homes already have a Wi-Fi router. How-
ever, most operators deploying a dual-mode offer make Wi-Fi
access points available to subscribers for purchase if they do
not already have one.
For subscribers using the operator's own broadband, the
ideal access point is likely to be an integrated DSL modem
and Wi-Fi router. This approach provides the operators with
the best control and also provides `sticky-ness' for the bun-
dled broadband and mobile services.
Home Zone Service
Add-on
(baseline $20/mos.)
Comment
Own Broadband
No Broadband
Other operator
Broadband
$10/ month
$10/ month +
3 mos free BB
$20/ month
Takes own BB +
Own Mobile =
Discounted HZ
Takes own BB =
Discounted HZ +
Discounted BB
Own Mobile -
Other BB =
Full Price HZ
Figure 2: Chart on pricing services
SPRING 2008
UMA ToDAY
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