Mid-contract telco service price hikes could lead to significant subscription churn to no-contract models
The cost of living is rising worldwide as inflation in the eurozone notched a new record highs. Consumer prices have jumped 5.1 per cent from January last year, up from 5 per cent in December and surpassing the estimates of analysts. Prices soar across the continent and many households struggle to cope with the added cost. Telecommunications aren’t exception. Mid-contract telco price change
Following the publication of a new Advisory Report detailing the various approaches European operators have taken to increase subscription service pricing in response to the cost of living crisis and next-gen network-build demands;
Emma Mohr-McClune, Technology Service Director at GlobalData, a leading data and analytics company, comments:
“There is no cookie-cutter approach to implementing a blanket, mid-contract pricing revaluation exercise, and plenty of risks. Such hikes could result in significant customer churn from fixed subscription and postpaid portfolios to more flexible, open-ended, and self-serviced no-contract models, such as those deployed by global digital subscription providers Netflix and Spotify.
“For end-users, a key attraction of the subscription model to date has been spend-certainty but mid-contract telco service price hikes put that benefit into question. We’re now seeing lower-cost brands tout fixed or guaranteed pricing in 2022 as a form of competitive response, marrying opt-out benefits with fixed pricing assurance – and that’s a problem for the fixed contract, postpaid, or subscription telco service model.
“For telcos, the writing is now on the wall. Consumers may appreciate the need for telcos to raise pricing mid-contract, but they’ll want to see new levels of flexibility and value-added experience improvements in exchange. Telcos need to be able to imbibe their subscription plans with more self-service features, allowing customers to downgrade or upgrade the quality of their service subject to use case or application needs, or even take a ‘subscription vacation’ at short notice.” Mid-contract telco price change
