Tag Archives: subscription

Flat Rate for Wireless

In the last couple of days the major carriers have announced competing flat rate wireless deals. No more counting minutes. These new plans might be as significant as the original AT&T one rate plan that revolutionized wireless pricing. I say “might”, because the price is still rather high and the plans all but eliminate the family plan users. For the heaviest of wireless users, this plan can save money and eliminate hassle, and follows on the heels of similar flat rate plans for wireless messaging and data usage.

A side benefit for the carriers is the eventual reduction in billing complications.
Do all telecommunication services eventually migrate to a flat rate pricing structure when they mature?
I say Yes. With excess capacity and variable demand, flat rate pricing is a good option.

Cable and Satellite television are flat rate, most home wire line services (circuit and VOIP) are flat rate, internet services are flat rate. As a communication service matures, the variable rate of the next bit approaches zero. As the variable cost of a new subscriber is virtually eliminated, the flat rate pricing schemes emerge.

The value added services that are up sells on these flat rate services, tend to be themselves, flat rate services. Examples are, HBO for $15/month, Navigator services for $9.99 month, Internet Virus protection at $5 month, etc.
With variable delivery costs plummeting they biggest expense becomes attracting a new subscriber and retention once a subscriber signs up for the service.
The exceptions to this trend are royalty and license fees for media and content. The creators of content expect to be paid for the distribution of their intellectual property. This is a very logical assumption.

 The technology that distributes their content is training the public to expect monthly subscription prices. It is inevitable that most media will also be purchased as a flat rate subscription. The key will be the manner in which the content creators are paid for their product, since you cannot generate good Music, Video, games, ringtones, books, etc, at zero variable cost.

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