While the headlines at MWC were dominated by the Facebook/WhatsApp deal and the slew of connected devices announcements, an undercurrent of pragmatic innovation occurred away from the limelight. Telcos unveiled pricing innovations, and outlined their refreshingly candid expectations of product and service innovations.
AT&T fired the first shot at pricing by proposing to offer unlimited international SMS to customers on its Mobile Share and Mobile Share Value plans. This was an attack on the price arbitrage attraction that is driving OTT substitution. Orange did not go so far as to match AT&T with an announcement, but its chief strategy officer, Elie Girard, reflected on the formulaic analysis of the elasticity of price and demand that the telco undertakes when deciding on a course of action.
The CEOs of Telenor and TeliaSonera did not quite focus on pricing per se, but their speeches leaned heavily on finding the appropriate business model and the right pricing to extend connectivity and derive an adequate return on investment.
In terms of European telcos’ business models, there is a clear trend for and recognizable unanimity on the need for a converged product offering. However, telcos also talked about adding new products, either directly or through partnerships. The allure for operators is clear: customers with larger bundles are less likely to churn. Orange stated that customers with Orange Money or Deezer are 50% less likely to churn, and a TeliaSonera chart showed declining churn as customers go from single play to quadruple play.
As AT&T’s vice president of ecosystem and innovation, Abhi Ingle, stated in an engaging interaction, the legacy lens for telecom is tired. So if the industry is to thrive in the future, it needs a new lens.
Emeka Obiodu is a principal analyst for industry, communications and broadband at Ovum. For more information, visit www.ovum.com/