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Service Providers Must Move Beyond Flat-Rate Pricing to Embrace Innovation

Service Providers Must Move Beyond Flat-Rate Pricing to Embrace Innovation

A newly-published global study of services, business models and marketing evolution describes a significant economic need for service providers to personalize the subscriber service experience.

The research report, "Insight on Service Provider Innovation," also illustrates service providers' concerns for both pricing and infrastructure to support subscriber-focused innovation.

Openet said that the survey shows that service providers are in the midst of a sea change. Flat-rate pricing models have been able to secure new customers.

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However, the shift to IP-based networks and services has increased the competition for subscribers across wireline, wireless and cable operators and IT-based competitors to deliver a variety of existing and new dynamic services such as voice, video, gaming and data services such as instant messaging and mobile search.

The global study, a commissioned work conducted by Yankee Group Research on behalf of Openet as of May, 20 incorporates views from 150 senior marketing managers at service providers, to fight off the plateau of average revenue per user (ARPU). Responses were evenly distributed across North America, Europe and Asia, according to Openet.

"Under the backdrop of looming economic slowdown and decline in their core services revenue the results of the survey highlights the major steps marketers of service providers are currently undertaking or planning to offset their decline in revenue. One critical factor for marketers is to roll out pipeline of services which are based on customer focused innovations," said Ari Banerjee, program manager, enabling technologies, Yankee Group. "The survey points to marketers believing that flat-rate pricing models will eventually prove to be the silent killer for service providers, and hence they are hedging their bets on more nuanced business models based on a heady mixture of 3 Ps, policy, promotion and pre-paid."

According to Openet, service provider marketers are asking for more flexibility both to quickly roll out services, and to allow subscribers to configure services and plans. The survey found that these requirements are at odds with the traditional infrastructures in place, and are pushing service providers of all types to migrate to next-generation technology that will provide the speed, accuracy and delivery of real-time usage intelligence to help segment and deliver new services profitably and reliably, to ensure customer satisfaction and loyalty.

"Service providers -- be they wireline, wireless or cable -- are in a race to meet the shifting customer demands for new IP based services, while pushing traditional infrastructures that weren't designed with these types of services in mind to the brink. Service providers know there is no 'killer app' for these savvy customers, who are defining where, how and to what extent they want new services, and are left with the choice of run faster or get left behind," said Michael Manzo, CMO of Openet. "Networks need to bridge their legacy infrastructures with next-generation technology that will scale to meet the speed and accuracy requirements of successfully and continuously delivering new and exciting IP-based services in this increasingly competitive landscape."

Openet is a worldwide provider of event processing and transaction management solutions.

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