Why Compete with Free? Target Customers that are Willing to Pay Instead

The traditional VAS model has been shattered by free offers to consumers from OTT providers. But business subscribers expect to pay for quality and utility. Why compete with free offers when instead MNOs can offer their own premium voice services to business users that are willing to pay?

Most mobile network operators today are confronted with a common challenge. Consumers are increasingly drawn to attractive services that they can access via IP connectivity. Since MNOs typically include generous data allowances in the bundles they offer to consumers, such services can effectively be used with no additional fee to the mobile provider. And, of course, most of these services are free to the user.

All of which means that MNOs don’t make extra money by enabling access to consumer services offered by OTT providers. What’s more, it means that few value added services that they may launch can attract a premium: consumers are used to free services and are reluctant to spend more than they need.

Free is the new benchmark for value added services and, even if free offers don’t last forever, different business models (ad funded, in-app payments, Freemium editions, and so on) mean that consumers can simply hop between services if they find conditions change and they suddenly begin to incur charges.

So what’s an MNO to do? How can they launch services to customers that really do attract a premium? How can they avoid competing with providers of free services and carve out a market that generates real returns?

The answer is to offer services to customers that are willing to pay for premium applications and outstanding quality. Such customers can be found in the business community. Business customers are used to paying fees for software that they use. As cloud services have proliferated, they have adapted to OPEX models in which they pay monthly fees for the use of CRM systems, such as Salesforce; secure online backup services; anti-virus solutions; desktop applications such as Microsoft Lync and Office 365; and many more.

That’s why MNOs can offer subscription-based services to business customers. They expect to pay, they are used to doing so, and they like the convenience of monthly fee plans. The best place to start with such services is to offer premium voice applications that can be layered on to monthly payment plans for an additional charge. For example, a hosted PBX service, mobile unified communications or inbound call management services are all proven to attract premium pricing across multiple markets. By offering such services, additional features and capabilities, such as on-demand conferencing or integration with Microsoft Lync can be offered to increase the value to business subscribers and generate enhanced returns.

The market for traditional value added services has been shattered by the ready availability of free services from OTT providers. Consumers are not willing to pay premiums for such services, with the result that MNOs are forced to compete with free offers. This limits ROI and will have a negative effect on profits. Instead of trying to compete with providers that support different kinds of business models, MNOs should target customers with proven appetite for services that are delivered through subscriptions and offer them services that leverage core competencies, such as call management and routing to enhance the experience for business and enterprise customers.

We know how these work. We understand what it takes to succeed in different markets and how such services can be packaged to build a profitable business. Why not talk to Gintel to find out how?

Easy Business Communications Suite, VAS, SME Market Focus, OTT providers, enterprise market focus, OPEX models

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