How to Monetize Cord-Cutters with Usage-Based Billing

Digital world.

The escalating popularity of IPTV and over-the-top (OTT) services like Netflix, HBO Now, and numerous other major content providers is causing cable operators to lose TV subscriptions. This change brings an unprecedented amount of strain on existing network infrastructure as these subscribers move from TV services to streaming services, greatly increasing bandwidth consumption. This trend is a major threat to communication service providers (CSPs) who are attempting to fairly monetize a diverse subscriber base while still providing a rich quality of experience (QoE) for every user on the network.

Providers have been hesitant to roll out new policies aimed at charging more for excessive bandwidth use, even though in a recent usage-based pricing trial in Cleveland major CSP Cox Communications predicted that charging for actual bandwidth usage will affect less than 5% of its customer base. This estimate tends to increase with more TV service cancellations from customers migrating to OTT content and 4K video, which are both becoming more widely available.

What’s most important for CSPs to recognize is that transparency and education is essential in order for new service terms, condition introduction, and enforcement to be successful. In a recent survey conducted on the influences to subscriber QoE, 27% of respondents claimed that they did not understand the question when asked if they would prefer to switch to a usage-based bandwidth billing plan.

Success hinges on the CSPs ability to accurately measure and report on per-subscription bandwidth, and easily share that information with their customers. Providers must follow a number of steps to achieve this, including the identification of:

  • Subscriber utilization habits
  • Areas of bandwidth congestion in real-time
  • Peak-usage periods and time-of-day patterns
  • Trends and growth analysis
  • Popular service packages and research offerings for marketing/sales
  • The heaviest bandwidth users on the network
  • Potential subscribers for upsell or new service packages

From here, new service offers can be created and notifications can be sent to ensure fair-access is granted to every user on the network and usage-based billing applies to users with their awareness. This helps providers monetize the heavy users on their networks to pay for the infrastructure upgrades that will satisfy QoE for all subscribers.

If we’ve learned anything from the numerous Canadian CSPs that have already successfully implemented usage based billing strategies — including major organizations like Telus, Rogers, and Bell — the concept of metered pricing doesn’t have to be looked at through a negative lens. Usage-based billing can actually offer subscribers a wide range of choice in the marketplace.

Network intelligence is a vital step for planning new revenue streams, however, subscriber usage data can be used for much more than just usage-based pricing policies. To find out how usage-based billing plans can help optimize your network, read the complimentary white paper: Why You Shouldn’t be Afraid of Implementing Fair Access Policies

  • Share: