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Monday, October 08, 2007

Redefining the mobility premium

I wonder what would happen if you conducted a survey of consumers, asking them to allot 100 points of 'value' between:

a) Having a mobile phone, with the convenience of an integral phonebook, camera etc
b) Having the ability to make & receive personal calls from wherever you are, send SMS and emails, browse the web etc
c) Having the ability to do (b) while you're actually moving - for example in a car or bus

I'll hazard a guess that the answer would reveal perhaps a 50/40/10 split of perceived value. Yes, there's probably better ways of phrasing the question, but you get my point. The actual 'moving about' part of mobility isn't that relevant unless you regularly make calls while driving - and ironically, the move towards data services exacerbates this.

This is all a bit of a problem, as mobile operators have traditionally priced calls on the basis of a premium which essentially blends all of the above. That customers value the handsets themselves as much as the service isn't news - it's at the core of the ongoing tug-of-war between phone manufacturers and operators, as to who 'owns' the customer relationship.

More relevant is the distinction between nomadicity and full mobility. The advent of VoWLAN in all its guises, cellular homezones and assorted other location-based mechanisms for differentiating call prices has been apparent for the last few years, in the guise of FMC.

But with moves like BT's tie-up with FON last week, as well as the nonsensical hype around metro-WiFi, it's clear that nomadicity (and cheap/free calls on mobile devices) is taking a step further to achieving 'B' above.

I wonder, though, if the push for geo-specific pricing is actually a special case of what should really be in place: velocity-specific pricing. Maybe we should be pricing mobile communications based on how mobile you are. A call when you're stationary is cheaper than a call when you're walking, which is cheaper than one made on the bus/in a car, and so on to trains & planes. If you're on a femtocell in your bedroom, or connected via WiFi/FON in your neighbours house, you shouldn't be subsidising the calls of the salesman in his Mercedes driving 80mph down the M4.

Now obviously there's a world of pain in communicating all this - especially as even though customers might only value high-speed mobility at 10%, they've grown up to expect it, on the odd occasions they need it. But with the onward march of GPS in handsets, motion sensors and so forth - even just working out a given customers' average number of cells-per-call - it ought to be possible to measure who's really deserving of paying the mobility premium, and who should be on the 'nomad' tariff.


Jonas said...

I think the geographical coverage is a premium for which consumers will pay.

Speed is less interesting.


Digital Evangelist said...


The mobility premium is paid for the handset features. With over 70% of calls on a mobile being made in a building it is not about mobility!

What people like is the address book and call log that allow people to quickly make calls. When the fixed networks can replicate the features and functions of a mobile on a handset they will be able to move traffic back onto fixed.

Mobile voice is currently worth more than fixed, both are over £1Trillion. Having been one who tested VoWLAN with a number of solutions all I can say is its not about the transport layer. I get better rates from BT with Option 4 than others get with SKYPE so its not about price.

What people will pay for is some form of UM thats tells me that the person I am call is available to take a call. Dynamic address books that allow communication is important if you are looking to increase voice traffic.

The only way that VoWLAN might work is if they use a VoIP solution similar to that seen in the Cisco Conferencing product, i.e. stereo voice that lifts the audio quality. Such a service would be a premium service that those who do live off just a mobile can do so. How many mobile calls do you have that result in someone saying "one minute I will just call from the fixed line" because the noise on the line?

Basem said...


I read this post of yours and found it rather odd! Advocating a new method of billing that is probably as unnatural as trying to introduce the American receiving-party-pays concept in a traditional calling-party-pays market.

I've always applauded your critics of most of the current mobile data models that is based on penalizing the customer for using their expensive networks and scarce resources (backhaul ...etc), while the customers themselves can't quantify their usage in KBytes or MBytes especially when browsing lively websites (web 2.0 and what not) and hence they end up being bombarded with unexpected charges that are nuisance, perhaps less to the corporate customer who's using his device for email (more or less quantifiable and acceptable at 5~10kb per email if one ever bothers).

In the same token, don't you think the above have a strong resonance to what you are suggesting; a premium for mobility? How can this be quantified by the user and reflected in the bill? what about prepaid? what if I decide to stop while making a call to be stationary in the cell serving me and avoid handover (mobility) premiums? Can I debate that I was stationary but due to bad RF I've been bouncing crazy between two cells, which is common in dense urban areas!

It looks good in concept, and probably promising when femto cells and VoWLAN gatewas are widely adopted, but I still believe that the only customer-centric quantifiable and fair measure is the per second (or minutes if you please) and in case of data (and voice in the future); it should be flat-rate.

Though i still believe that ISPs and cellcos should get guru users who are bandwidth hungry to pay for a premium and leave the average internet dweller (facebook, skype and browsing ...etc) user to pay a fair price that reflect today's post developed teleco market.

Ammar said...

Dean & Basem...

what is being described here is curtrently available and is widely used by operators, with some minor changes.

call it Home Zone Billing, Special Zone Billing, Uni-Zone...etc. ,in all of them you just use you register your home or the location where you like as your special zone... once you are in this area (you can verify it via USSD) then you can make the calls at the special rate... this does make sense since you are not making handovers and you are utalizing less resources.

however another interesting feature is still under development especially after the Soft-Switches and Media Gateways being common is that if i am talking within the same area; A and B Parties are in the same locaiton then the call should be charged even less...

from my perspective it's either you are stationary or mobile, another step though stationary in a certain place, the speed is not important since sometimes moving at a certain speed or above will hand the subscriber to the Umbrella Site (if any) which costs less than a person walking on his feet and making handovers between the Micro-Cells!!!