It's going to be a little difficult to provide a definite answer as to how broadband service providers are setting their prices. Certainly, broadband companies calculate their infrastructure costs as they decide on pricing. After all, they need to make sure that they don't end up losing or only barely breaking even. There are also many factors that need to be considered. What's for sure, though, is that broadband prices are influenced by the costs involved in making the services available and also by external factors, particularly the prices being offered by competitors.
in 2017, what can be expected from ISPs when it comes to the prices they set for their broadband products? Also, what are they doing to attract new consumers, especially millennials?
In Defiance of Net Neutrality
In the United States, a new FCC chairman has been appointed and net neutrality appears to be in danger. Large broadband companies may soon have the opportunity to lobby once more for the FCC to strike down or at least tone down its net neutrality rules. This opens the possibility for internet service providers to charge different prices for different data streams.
You might be wondering why we're including this here when the subject of this post is competitive broadband pricing and promos. Here's the justification: with the watering down or complete riddance of net neutrality rules, large broadband service providers that have difficulties delivering quality services to all customers may soon have the chance to regulate internet connection speeds to be able to make the most of their current infrastructure. It can be a way of remaining competitive by deferring investments on infrastructure and tweaking connections to deliver relatively acceptable service to a growing customer base without incurring additional costs.
Well, this is not something that is already prevalent but it may happen the moment net neutrality is crushed under the new US government. Most internet service providers would most definitely make the most of favorable government policies to reduce their expenses and tweak their delivery of internet connection services for more profits. In other countries, the idea of net neutrality is not that much of an issue yet but they may soon encounter the same problems as their internet using populations grow.
DSL on a Continuing Decline
DSL is losing popularity. As a consequence, the prices of DSL services are also declining. Companies try to renew interest in the DSL technologies mostly be reducing prices. There's a limit as to the speeds DSL can offer. It also does not bode well for DSL that relatively new technologies like 4G/LTE, fiber, and 5G exist to offer significantly faster and more reliable ways to connect to the internet.
In places where fiber and 4G/LTE connections are becoming more popular, what many internet service companies do is to highlight their DSL + phone line packages and throw in truly unlimited (no data cap) internet connections, albeit at speeds that don't compare to 4G and fiber. There are also companies that somewhat embellish their phone+broadband package with web-enabled devices. In the Philippines, for example, a major telco is offering a "tablet-internet phone" package, which includes a telephone which serves as a dock for a tablet. This package is like an upgrade for a regular phone line, wherein the tablet and telephone are meant to be used together but the tablet can still be taken out to be used in the usual way.
Focus on Naked Broadband with Unlimited Data
With the ubiquitousness of smartphones, it's understandable that subscribing to home phone lines is already becoming less and less appealing. Not many are willing to spend for home phone connections nowadays. As such, companies that used to offer landline services are left with the problem of what to do (how to monetize) with their phone line infrastructure (copper lines) when customers are already shifting preferences towards mobile phone lines, fiber internet, and 4G/LTE fixed wireless internet plans.
The solution is offering naked broadband services. In New Zealand, for example, there's Bigpipe that specializes in unlimited naked broadband ADSL. The company offers a truly unlimited internet service (no throttling) at a cost that's cheaper than a bundled phone+broadband service.
Selling Broadband to Millennials
Millennials are said to be the consumers who will change the market landscape. It's a sensible idea. After all, in the United States alone, there's an estimated 80 million + millennials (based on 2015 figures) in the consumer market, making up around a quarter of the country's population. In 2015, their buying power was estimated at around $200 billion yearly. They're a viable target for broadband companies.
To market broadband services to millennials, broadband companies need to acknowledge their preferences and buying habits or tendencies. The following notable points about millennial consumers are worth considering:
- Millennials are almost unlikely to be influenced by advertising.
- They go over blogs or reviews before making purchases.
- Millennials like to engage with brands/companies on social media networks.
- They like co-creating products with companies.
- They use several tech devices.
- Millennials tend to be brand loyal.
Considering all of these, it can be said that broadband companies are more likely to attract millennials if they can offer ample data allocations or truly unlimited services (considering the multiple devices they regularly use). Also, it would be good to offer custom plans to cater to the fondness of millennial consumers in co-creating products. Additionally, it is very important to create great brand reputation or image. It would also be advisable for broadband companies to ditch traditional advertising and focus on reaching out to customers through social media and engage them.
Furthermore, it's important to note that millennials are meticulous with their product options and they tend to want to know more about these options. As such, broadband companies are unlikely going to attract them if they abuse the possibility of net neutrality getting watered down. Broadband companies are unlikely to get many millennial customers for their DSL plans. Lastly, broadband companies have greater chances of attracting millennials if they dangle truly unlimited (no data cap) internet service.
