Battle of Right Price Model for 5G

By Catalina Joseph, Telecom Tech Outlook | Monday, February 15, 2021

It is essential to have the best pricing models and business infrastructure for the 5G offering, otherwise, it will become vulnerable to the wave of OTT players very soon. Let's have a look at various approaches for right pricing model of 5G

FREMONT, CA: The process of migrating from 4G to 5G has already started, and many forward-thinking telecoms have launched digital brands to run up full-fledged 5G layouts. The shift will result in a sea change in the way traditional telecoms are working. With the newly launched digital brands, telecoms are experimenting with customer experience, service offerings, and business models, which will go mainstream with 5G.

It is equally important to have the best pricing models and business infrastructure to extract the value from 5G offering, otherwise, it will become vulnerable to the wave of OTT players very soon. To fix this, there must be a consensus on pricing the best for 5Gs. As of now, some operators have started offering 5G at no additional cost to that of their existing 4G plans. The question here is, how long will they continue providing the service for free, and is it feasible in the long term?

With number of options available with the operators, let's discuss the three probable approaches for fixing the right price model of the 5G.

The Rewards Approach

Creating a value-added service to the existing plan is an age-old approach to introduce something new in the market. They are often known as reward-based programs or approaches, which include discount coupons, access to movies, or concerts. This keeps the user engagement high, and people usually stick to the operator, checking offers every now and then. No doubt, they have built a relationship between consumers and the brand; it is interesting to watch how long can the operators compete to the emerging OTT players.

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The Pay-for-Speed Approach

Some operators have found out a simple and straightforward approach that values speed, more than anything. As the name suggests, the approach is to have multiple pricing bases for different speeds with obviously the highest speed costing the highest. It lets the customer choose what speed they want and prefer to download or stream contents and choose the plan accordingly.

Marketplace and Bundled Approach

Operators are now offering opportunities for the users to connect with friends, gift data to friends, form private social groups, and also to manage the plans in real-time. It enables an operator to drive more customers to the marketplace thus created. The bundled approach is a new one that allows a customer to choose plans along with an exclusive service pack, e.g., a certain extra amount to the existing plan will activate Netflix for a month.

It is interesting to see how new operators are moving to innovate and distinguish themselves from their competitors, keeping the pricing models in mind. While all the offerings are based on 4G today, they form the base of driving customers to create high-engagement fans and increase revenue in return.