It’s no secret 3G and LTE tablet sales are less than expected due to the popularity of Wi-Fi only tablets. If tablets are the biggest technological breakthrough since the smartphone, why are customers hesitating to pay a little bit extra to own a tablet that will connect them to data anytime and everywhere?
Some online speculation has placed the blame on wireless carriers and their pesky contracts, stating that today’s customers don’t have an appetite for 2 or 3 year term agreement when their tablet is likely to be replaced by a newer model in as little as 12 months.
Although customers don’t enjoy signing contracts, they provide the hardware subsidies which allow most tablet and smartphone purchases to fit nearly every budget. The real culprit is the required commitment to service contracts on top of new hardware activation to get the best voice and data plan pricing. Many customers tend to realize this commitment at the time of service cancelation or second device acquisition. The natural acquisition of a tablet is typically that of a customer who already owns a smartphone equipped with a voice and data plan, which they may have scored on promotion. It’s at this point consumers do the math and choose the simplicity of Wi-Fi over the hassle of 3G and LTE tablets.
Contracts are not the problem, but the complexities are exhausting
As I’ve written previously, contracts are a useful tool for wireless carriers until customers have a desire to budget for the full purchase price of their hardware. But where carriers need to call it a day is on service contracts. The current competitive system consists of wireless carriers launching promotional data plans that falsely set customer expectations about the real cost of data. Furthermore, many of these promotional plans are rigid with terms and conditions that do not allow for device data sharing, as carriers try to protect themselves against the longterm risks of offering such low cost price options. With all that said, are wireless carriers actually doing customers (and themselves) a favour launching promotional data pricing?
For many of the big telcos, churn is on the rise and customer satisfaction is declining. These are important metrics to every wireless carrier so why do they continue to surprise their customers during sales conversations?
Customers are not happy when they learn that the data they are paying for, but not using, cannot be shared amongst multiple devices. They’re not happy when they’re told they need to re-haul their existing data plan simply to accommodate additional hardware purchases. They’re definitely not happy when they’re stung with early cancelation fees (ECF) on term-based promotional data pricing they previously committed to as a single device user. It’s mentally and emotionally exhausting and I don’t blame customers for skipping the whole process and purchasing a cheaper, no muss, no fuss Wi-Fi tablet.
Data is king
Smartphones and tablets are here to stay. Wireless connectivity has become as essential as the microwave, washing machine and indoor plumbing to nearly every First World household. Consumers will never be done updating and adding more wireless devices to their everyday lives, and they’re doing it faster than ever before.Wireless carriers should embrace this increase in demand by revamping their data pricing structure and building an activation process that doesn’t treat data like an add-on to voice.
People are excited to pay for convenience of constant connectivity, but not when it requires a strong dose of Advil® to make it through the activation process. Wireless carriers should stop launching data plans that are smartphone or single device specific -in other words, not “add a tablet” friendly. Instead, they should be jumping at the chance to give customers access to X data for Y cost, no matter what the device is, or time of activation on their contract cycle.
Satisfied and well-informed customers who can connect to carrier networks using multiple devices, anxiety free, means less churn, which means more money. If simplicity and transparency were brought to tablet activation and monthly data plan costs, make no mistake that customers would happily sign term commitments.
Carriers must remember they’re not in the hardware business
Wireless carriers seem to have been swept up in the flurry of rising iPhone subsidy costs and are simply addicted to activating smartphones, while all this time forgetting they’re actually in the business of providing a service and not hardware. Carriers need to start focusing on how their services are being consumed by their customers and less on how to trap their customers in a whirlwind of ECF and false perceptions about the true cost of data.
I have heard enough telco analyst calls to know they understand their voice business is declining and being cannibalized by an expanding data segment. Each call emphasizes the adoption of data being critical to network evolutionary roadmaps that bring down the cost of data and hardware. So why aren’t their data plans aligned with these understood changes?
Could it be their fear of a short-term squeeze on profits margins? If so, I must remind them that granting customers easier access to data upon activation of a 2nd or 3rd device will only yield an increase to profit. Single device customers will soon be a thing of the past.