Its an exciting week but lets not get ourselves distracted. Some fundamental knowledge about the telecoms we are investing is important.
We talked about in the past why telecoms in US and Europe are moving towards tiered pricing and charging more to people who use more mobile bandwidth.
The future could be that Singtel and Starhub could not increase their tariffs for LTE implementation. Would you pay more than $40 dollar just because LTE provides more throughput? I think not. There is just so much you are willing to pay.
Mobile data charging is a pickle for most operators. When offered quota-based plans, subscribers react with confusion (not at the least alleviated by data plan calculators and other visualization aids). Frustration comes next, when they are offered ‘unlimited’ data plans, but those are too slow or get throttled. Selling bits and bytes simply doesn’t cut it anymore. Strand Consult is already predicting pricing model failure, suggesting that “any operators that believe they can increase prices by [simply] introducing LTE are in our opinion naïve.”
The future could be that Singtel will segment users according to the services provided
- webpage viewing (non-bandwidth intensive)
- streaming videos and music (bandwidth intensive)
- mmorpg gaming (relatively neutral bandwidth intensive)
- location based retail
- banking and stock market specific service
- personal cloud
- office and project management cloud
Different services provides different benefits to different users. Telecoms should charge based on the quality of service you want and they should be measure this way.
Not as a dumb pipe.
Do read this article It is coming: The emergence of second-class mobile citizens.
Do tell me what you think this can be the case for your home telecoms.
Kyith is the Owner and Sole Writer behind Investment Moats. Readers tune in to Investment Moats to learn and build stronger, firmer wealth foundations, how to have a Passive investment strategy, know more about investing in REITs and the nuts and bolts of Active Investing.
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Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Fee-only Wealth Advisory firm Providend. All opinions on Investment Moats are his own and does not represent the views of Providend.
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