Dynamic tariffing

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Dynamic tariffing

With Dynamic Tariff Service (DTS), using Cell Broadcast, operators can link subscriber pricing with network utilisation at the subscribers’ location at any given time of day.

This dynamic approach to tariffing can increase revenue, reduce costs, and optimise network capitalisation for operators, allowing them to provide discounts in areas where the network is under-utilised. The operator’s statistical or dynamic information shows for each cell site what the traffic load is throughout the day and throughout the week. When at certain periods in the day there is ample capacity available, traffic can be stimulated by offering a discount. Each cell uses Cell Broadcast to broadcast the discount percentage. This information is shown on the main screen of the mobile device through the cell information feature and updated continuously, based on time and location.

As well as delivering operators with competitive differentiation, dynamic tariffing allows them to grow their business models beyond subscriber growth only and towards value-add services that can reduce customer churn and tempt new customers to join. Importantly, as the use of the network is optimised during non-peak hours, dynamic tariffing allows operators to increase subscribers without overburdening the network, meaning that no new capital expenditure is required.

Dynamic tariffing is already delivering measureable KPI benefits to operators today. A report from the Spanish consultancy firm mmC Group, ‘Boosting Performance and Achieving Differentiation through Dynamic Pricing’, showed that one operator enjoyed an ARPU increase from 12$ to 13.8$ combined with a 19 per cent decrease in network peak usage in the busy hour, improving the quality of the network and delaying the requirement to invest in upgrades. In addition reducing Churn from 6.5% per month down to 1.5%, and lengthened tenure of 21 Months from 17 months.

DTS represents one of those occasions where everyone benefits – the end user benefits from much cheaper calls while the operators benefit from being able to rapidly grow revenue without needing to upgrade the network. It addresses a very real challenge in an elegant and cost effective mechanism that will allow the mobile market to expand over the next decade and beyond.