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.
While working on my recently published report, The Cloud-Driven Evolution Of Asian Tech Distributors, the tech vendors and distributors I interviewed drew parallels between telcos and tech distributors, both of which sell cloud-based solutions. However, during further discussion, the friction and competitiveness between the two quickly became apparent. So why should they compete when they can exploit each other’s resources and pursue joint go-to-market initiatives? By partnering, each can focus on doing what it does best to meet customer needs.
Telcos’ reach, ready infrastructure and existing customer bases provide a solid cloud foundation:
Back-end infrastructure. Telcos’ robust network and data center infrastructure is critical to setting up and delivering cloud-based services swiftly and without massive additional investment. Moreover, their businesses are well-suited to annuity models.
An existing base of enterprise customers. Although telcos aren’t considered a strategic enterprise provider in most instances, their access to a large base of qualified enterprise accounts and existing relationships potentially provides a very good foundation for cloud solution sales.