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Policy management’s potential is only just being realised as operators look to Policy 2.0 as a means to monetise data traffic rather than simply control consumption.
Policy management’s potential is only just being realised as operators look to Policy 2.0 as a means to monetise data traffic rather than simply control consumption, writes John Aalbers
AT&T’s exclusive right to offer the iPhone ended on 10 February with Verizon getting its own CDMA version. The Verizon iPhone was probably the worst kept secret in the technology world, but a close second – and perhaps cause for concern at Verizon, has been the poor performance of AT&T’s network since it began offering the iPhone in 2007.
AT&T’s troubles don’t guarantee trouble for Verizon. Some even argue that Verizon’s network is better prepared for the iPhone but, while we can’t know exactly how many people will go for the Verizon iPhone, there will be incredible demand for it and, potentially, a negative iPhone effect for Verizon. Perhaps a harbinger of future complications, the moment the announcement became official, a torrent of web traffic hit Verizon’s website, causing page-load times to more than double.
It’s intriguing then to think about how Verizon might handle an increase in mobile data demand differently to AT&T and how using policy management both defensively and offensively may help operators avoid data demand problems.
AT&T found out the hard way that mobile data demand can sabotage network performance. When data choked its network and customer complaints flooded in, its response was two-fold. Last year, AT&T increased its infrastructure spending by 10% to improve its wireless network. Having more capacity and faster connections is one way to keep mobile bits and bytes flowing smoothly.
The other way to keep profit margins and customer experiences positive is to protect the network with defensive policy controls around pricing. AT&T was the first to drop unlimited data plans. The network giant defended its new tiered offerings by assuring subscribers the majority would save money because average usage falls within the provided bandwidth. But really, AT&T needed to protect its network to boost customer experience and balance costs with revenue.
The benefits of these defensive strategies, however, are questionable. Network reliability is still a problem and, as mobile data demand is only going to rise, more customers will incur overages as they reach the limits of their plans. Good for incremental revenues perhaps, but not customer satisfaction.
Rather than trying to keep customers’ usage habits in check and prevent them from accessing the amount of data they want, operators should get on the offensive, using policy to realise incremental revenues while providing additional value to customers.
As I write this, the first official rules for net neutrality have been formalised in the US and they could be the starting gun for more unique policy models in that region that reflect what other global operators have been doing for some time.
For example, with the leeway the new rules allow for wireless traffic prioritisation, operators could begin to implement policies based on applications, data type or time. Facebook addict? Get a Facebook premium service that gives you faster access to those applications on your mobile device for a slightly higher price. Night owl? Get a lower data rate if you agree to only have mobile data access during off-peak hours.
Each of these service combinations presents an opportunity to operators for market differentiation; to make their customers feel appreciated and give them real added value; realise incremental revenues; and obtain more control and predictability over the way data is consumed on their network. Prioritising data could actually be an indirectly defensive policy measure. If operators can predict that some subscribers will only use certain kinds of data, they can offer what’s not being used to someone else.
Operators have figured out how to prevent some of the data demand troubles with defensive pricing strategies using basic policy management tactics. That was then and the future is now. Data demand will only increase, and defensive tactics will only be – somewhat – effective for a short time. Operators need to get on the offensive and use policy in a more proactive manner.
John Aalbers, CEO, Volubill.
