Innovative Pricing

The other day, I was reading an article in a newspaper which has stated the per second pricing by the telecom companies a real price innovation. Most people will admit or get carried away with such a statement. Of course it's a great innovation but for whom is the real question. Is it so innovative that the technologies associated to bill on per second pulse can make your bills lighter? Actually, not. It's the telecom companies who will eventually make sure they do a price modeling in such a way that there is absolutely no impact on revenue yet include a billing model that looks appealing to the consumer. This is like the old times where you had skewed plans like talk more plans or listen more plans. Eventually, however a combination you choose invariably your bills would be around the same. Every user in some ways has a notional ARPU in mind. And as it comes closer to that number we make sure our bills are within that range.

Getting back to the per second billing, why will we not see much of a difference in the per second billing for most customers. After the call rates have come down drastically most people speak in multiple of minutes. So if per second pulse is introduced statistically you will on average save about 30 seconds per call. If your calls are of 10 mins range approximately, then you save just 5% in the call time. If your calls are mostly 2-3 minutes then also your savings are within 20% of the call time. And if you are charged 20% higher for per second billing (50p / min or 1p / sec) then you actually need to make sure your calls are less than 2 mins to be able to get maximum benefit or else you will land up paying more for your calls.

The final question who is on the receiving side of the innovation as usual the customer. But there is still a gain. There are a class of people in the low-mid income group who use their cell phones to track business. Like say a taxi driver. Now he can make a call to the customer to update his availability rather than giving a missed call. Such announcements are going to be sub-minute calls and they will not mind making the actual calls rather than waiting on a missed call. After all whenever there is a new technology there are some sections who will get benefited. And it's good if it gets to the bottom of the pyramid. But may be some of that may not really make it down to the bottom if the rentals are kept different for per min vs. per sec call rate plans.