How to charge for video? part 3 - Pros and Cons

Here are the pros and cons from the methods identified in the previous post.

	Pros	Cons
Unlimited usage	Customer friendly, good for acquisition and churn reduction	Hard to plan network capacity
	Will be a real differentiator in the future	Expensive, if data usage continues doubling on a yearly basis
Fair Limit	Provides some capacity planning	The limit tends to change often, as the ratio of abuser vs. Heavy users goes down.
Hard Cap	No revenue leakage	Not customer friendly
	Easy network planning (max capacity needed = max number of users x caps)	Does not allow to capture additional revenue
Hard cap with overage fee:	Can be very profitable with a population that has frequent overage	Many customers complain of the bill shock.
Soft cap	Customer friendly, easy to understand	Not as profitable in the short term
Soft cap with throttling	A better alternative to hard cap in markets where video usage is not yet very heavy	Becomes less and less customer friendly as video traffic increases
Speed capping	Very effective for charging per type of usage and educating customers	Requires sophisticated network (DPI + Charging + subscriber management)
Application bundling	Popular in mature market with high competition, where subscribers become expert at shopping and comparing the different offerings.	Complex requires sophisticated network, requires good understanding of subscriber demographics and usage to maximize revenue
Metered Usage	Very effective way to ensure that capacity planning and revenue are tied	Not very popular, as many subscribers do not understand Megabytes and how 2 minutes of video could “cost” from 1 to 10 times .
Content based charging	Allow sophisticated tariffing that maximizes revenue	Complex requires sophisticated network, requires good understanding of subscriber demographics and usage to maximize revenue. Technology not quite ready.
Time of day charging	For operators who have a “prime time” effect with peaks an order of magnitude higher than average traffic, an effective way to monetize the need to size for peak.	Not very popular. The network is still underutilized most of the time.
Location based charging	Will allow operators with “hot spots” to try and mitigate usage in these zones or at least to finance capacity.	Most subscribers wont accept having to carry a map to understand how much their call/video will cost them.

As with many trends in wireless, it will take a while before the market matures enough to elaborate a technology and a business model that is both user-friendly and profitable for the operators. Additionally, the emergence of over-the-t0p traffic, with now content providers and aggregators selling their services directly to customers, forces the industry to examine charging and tariffing models in a more fundamental fashion.

Revenue sharing, network sharing, load sharing require traditional core network technologies to be exposed to external entities for a profitable model where brands, content owners, content providers and operators are not at war. New collaboration models need to be thought of. Additionally, while the technology has made much progress, the next generation of DPI, PCRF, OSS/BSS will need to step up to allow for these sophisticated charging models.