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Posted by Dan Bieler on December 4, 2012
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:
But speed-based pricing is a clever move as:
Of course, there are downside risks of speed-based pricing:
In my view, speed-based pricing will become a much more widespread charging approach. Flat rates and usage-based packages constitute only a half-baked solution to deal with the OTT onslaught. The problem with simple flat rates is that they open the door to OTT providers and “data-free-riders,” where a small percentage of users consume an over-proportional percentage of data traffic. In this respect, flat rates distort the carrier investment incentives and potentially harm the market.
The report Voice And Messaging Are Not Dead - Prepare For The Implications Of Over-The-Top Communications discusses this and several related trends.
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