Flat-rate pricing and maintaining historically stovepiped business models are the best ways for carriers to relegate themselves to being the bit-pipe players they swear they don’t want to be. So says Ari Banerjee, research director at Yankee Group, who adds that service providers need to look beyond their batch-oriented billing platforms to something that will support tiered pricing and policy and control-driven business models.
In his recent report, “Thinking Beyond Flat Rate and Stovepiped Business Models,” Banerjee said converged IP networks – the clear long-term goal of service providers – will intensify the challenge of bandwidth management, the service providers’ abilities to control quality of service and maintain service level agreements according to subscriber policy, and the real-time perspective on usage and network capacity.
The report includes an assessment of the business support system vendors’ abilities to address these issues based on criteria in Yankee Group’s Anywhere Dynamic Policy-Based Billing Scorecard. This assessment and conversations with leading service providers led Banerjee to conclude that service providers need to embrace these new models to remain competitive and improve their profitability, and that many of the vendors stand ready to support them.
“From a software standpoint all these [vendors] are pretty well prepped for the change,” Banerjee said.
However, end users are not. They like flat rate. And since flat rate is so prominent, no service provider wants to make the first move. They are concerned with the customer perception of being too high-priced or complicated.
“Doing something different creates a lot of risk for service provider,” Banerjee said.
But doing nothing runs the risk of commoditization and allowing content providers to be the revenue winners. Service providers know this. Fifty-seven percent of respondents to Yankee Group’s survey in North America and Europe agreed that a flat-rate monthly fee approach to broadband-based services was unsustainable. In Asia-Pac, 70 percent felt this way.
