Telco Thought Leader Explains Big Bell Dogma Thinking

In an interview in Network World, Roberto Saracco, director of the Telecom Italia Future Centre, said “the major reason carriers are placing data caps on their LTE services is to prevent users from going exclusively with wireless data services

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and ditching their landline connections.” (Note, the quote is from the article in Network World and not a direct quote from Saracco.)

Network World’s article included this direct quote from Saracco: “You’re always going to want to make the maximum amount of value, and you don’t want to have your fixed-line network being cannibalized by mobile.”

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Bell Dogma: Do what you can to slow the mobility revolution in order to protect the status quo.

4 Responses to “Telco Thought Leader Explains Big Bell Dogma Thinking”

  1. Jim Says:

    I agree. Reminds me of the same thing as we see when we examine our American history and see what jp Morgan did w the advances of tesla. kill new tech advances in the name of the dollar.

  2. Pete Says:

    In a way, I agree but I don’t believe that this is about protecting the status quo but more about protecting the level of service that is provided to all customers rather than allowing a small segment of the customer population to monopolize all the network resources.

    If this weren’t the case, Sprint along with other carriers would offer free tethering and hotspot capability. Sprint doesn’t offer this capability for free even with thier “unlimited data” claims so it would be ridiculous to castigate other carriers for not doing it because if the myth of unlimited data were true, the carrier wouldn’t care how it was being used.

    The reality is that if this were the case, many more customers would become bandwidth “hogs” and each service provider would have to beef up the network capabilities which would cost more per subscriber.

    Sprint doesn’t seem to want to realize that different types of customers have different usage, data and budgetary needs -or at least they would prefer just to cater to a single type of user in order to reduce billing costs. The fixed pricing of Sprint along with the jumps in ARP that Dan Hesse brags about to Jim Cramer are going to cost Sprint in the end because folks like me are not willing to pay for the usage of others and will jump to other carriers.

  3. Russ Says:

    Thanks for the note Pete.

    I’m not sure I follow your connection to the quotes I provided. The quotes said that wireless data caps exist “to prevent users from going exclusively with wireless data services and ditching their landline connections” and to not have the “fixed-line network being cannibalized by mobile.”

    I don’t disagree with the basic points you make (not the Sprint specific ones) – unlimited increases the risk of data hogs, and that different types of customers have different usage profiles.

    But that has nothing to do with the quotes in this post.

    At Sprint, we do make a distinction between different types of customers, but we think that “unlimited” is an attractive value proposition, and apparently customers do as well.

    The analogy I’ve used here in the past is of an all-you-can-eat buffet. Such a buffet rarely has one price, but rather, it will have an adult price, a children’s price, and a senior price. This recognizes that children and seniors generally eat less than adults (although there are plenty of exceptions). If they could get away with it, all-you-can-eat buffets would probably charge an even higher price for teenager boys, but they don’t.

    Similarly, Sprint has typically had 2-3 pricing tiers based on different user profiles. Until late last year for some price plans we had 3. Smartphones were the equivalent “adult” buffet price. Feature phones were $10 less (“the children and seniors” buffet price) and 4G smartphones cost $10 more (the “teenage boys” buffet price). Since late last year, we’ve basically had 2 tiers – smartphones and feature phones. (There may be nuances, I’m not in the pricing, nor in the sales department, but the general concept holds no matter what the intricate details.) Basically, we have recognized that customers with even the most basic smartphones generally use more data than those with feature phones, and those with high end smartphones (which tended to be our 4G devices) use a LOT more data. Lately, all smartphones have advanced to the level we used to call “high end.”

    Just like all-you-can-eat restaurants, this “unlimited” approach is a key differentiator for us. We need to make the business model work, which means that “skimpy eaters” like you might not be attracted to us, but in this smartphone-dominated world, there are fewer and fewer “skimpy eaters” around, and everybody is “eating” more and more data everyday.

    Meanwhile, we recognize that we should still want to “feed” customers for whom our “all-you-can-eat” brand doesn’t resonate, so we have the most sophisticated brand strategy in the market, serving other customers with our owned and operated prepaid brands and many independent brands with varying value propositions through our rapidly growing wholesale business. Each of these businesses (prepaid and wholesale) is also carefully managed to drive profitability. Across all of those businesses, I think we’ve been doing pretty well – adding more than a million customers each quarter for the past several quarters.

    But most of all, we’re trying to help, not hinder, our customers from fully embracing mobility. Unlike many of Siemen’s customers, we don’t have a monopoly wireline business to protect.

  4. PaulHTX Says:

    Hey Russ,

    I’m glad to see that you haven’t entirely abandoned the blog. I know that this site had devolved into a customer service forum. I’m hoping, both for you and your regular followers, that that may have died down a bit and that you might be able to put up a post every now and then. I miss reading your takes and insights on events and articles.

    Hope to hear from you soon.

    -Paul

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