This summer Switzerland’s incumbent carrier, Swisscom, launched a simple but revolutionary new mobile tariff, Natel Infinity. Infinity is a speed-based tariff that comes in the versions XS, S, M, L, and XL, which represent download speeds ranging from 200 kbit/s to 100 Mbit/s. Prices range from CHF59 to CHF169 per month (€49 to €139). Significantly, the tariff throws in unlimited national voice, SMS messaging services, and data usage without any additional charge (XL even comes with unlimited international calls to most destinations and SMS).
The idea is simple: The greater your urge for fast mobile services, the more you pay — irrespective of which apps you use and how you wish to communicate. All that matters is speed. In this respect, Swisscom has replicated for the mobile world a tariff approach that is already fairly common in the fixed-line world. I believe this move by Swisscom is noteworthy in two respects:
· It effectively pulls the rug from under the OTT voice and messaging services like WhatsApp and Tango by removing the arbitrage potential created by time- or distance-based pricing schemes.
· It brings in line capital spending on and actual demand for network infrastructure capacity.
But speed-based pricing is a clever move as:
· Users always experience “speed” but don’t feel “data download.”This makes it easier for carriers to emphasize their comparative advantage vis-à-vis over the top providers of voice and messaging services, as well as “lame” carrier peers with a poor-quality network infrastructure.
The other day I had an interesting discussion with Google about their Fiber-to-the home (FTTH) infrastructure. Google’s reasoning behind the move into the network infrastructure space stems from the belief that online growth and technology innovation are driven by three main factors:
The cost of storage, which has fallen considerably in previous years.
Computing power, which has increased in previous years.
The price and speed of Internet access, which has been stagnant for a decade. Today, the average Internet user in the US receives 5 Mbit/s download and 1 Mbit/s upload speed.
I was in Singapore two weeks ago and had the chance to meet Malcolm Rodrigues and Greg Mittman from an emerging broadband service provider called MyRepublic. MyRepublic is a new service-based operator (SBO) licensed in Singapore in 2011, purpose-built for Singapore’s national broadband network (NBN). Since the launch of the NBN service in Singapore, it has created new opportunities for SBOs to lease the network from OpenNet, the company that operates the NBN in Singapore and sell high-speed fiber broadband services to consumers and businesses in the island country. And MyRepublic is one of the most interesting companies I have seen, with an innovative business/go-to-market model that:
Has an operational model based on light assets. Leveraging the NBN network and a neutral operation company, MyRepublic is able to get access to the nationwide fiber broadband network at the same price as other established telecom operators in Singapore, including the incumbent SingTel. It only needs to put its own gateways and other limited network assets at OpenNet for service provisioning, network monitoring, billing, etc.