Hi Maurice,
I think you have a really cool different point of view on things. But I think you are wrong about "cat's eye" pricing on cellular bills.
For your system to work, customer have to prefer saving a few bucks a month, but with the possibility that a few phone calls they really want to make will wipe out their accumulated savings a year at a time.
Further, you have to be building your network in a way that makes it very difficult to grow your business to track your success. In order to afford a lower bill per minute to your customers, you actually have to have invested less in your network than your competitors, by more or less the ratio of the ARPU. So if you are getting $10/month and they are getting $30/month, your network has to have 1/3 the costs, which pretty much mean 1/3 the number of base stations. But then if you are successful, and customers show up, you run into a restriction point where your new customers say "forget it" when you disclose just how often and how much premium they will pay for calling in the busy hour. Building out your system after the fact strikes me as overly expensive, as networks are generally planned from the bottom up, and not added to incrementally. Maybe you have a different way to do network buildout to go along with your billing scheme/business plan?
Now suppose you do get the capital to build your netork and you start growing customers. At first, NONE of your network is crowded so your revenues are 1/3 the other building companies revenues, and you are toast at paying back your vendor financing.
Now suppose you get the customers up to this magic balance where you have 3X customer-minutes per base station as your competitors. You then find the customers who really don't want to pay you $10 one month an $40 the next wandering over to the $30/month all you can eat model, so they have predictability.
Finally, suppose you succeed beautifully. You get your competitors offering exactly your pricing plan to their customers as an option, and making more money off it than you did! Why is that? Because they have built out a network to meet the busy-hour demand (following a hundred years of telecom experience, which doesn't prove they are right but should not be dismissed too lightly). As a result, they have LOTS of spare off-peak capacity FOR FREE (paid for by the monthly all-you-can-eat types) that their new price-sensitive callers can use, and they can virtually keep their price sensitive callers off the loaded sectors by pricing them off.
My conclusion is that AT BEST the cat's eye scheme makes an interesting marketing gimmick for a part of the public that you might be marketing too. But your main network are going to be the people who want to make the call when they need to, and will deal with network congestion by 1) trying their call 2 or 3 X to get it through or 2) Quitting your service and going to another even at greater expense if they can't make the calls they want. I admit I am simply selling the "conventional wisdom" here, but as a customer I buy that wisdom. I would rather up my monthly plan for a known $10 extra per month and talk whenever I feel like it than I would like to bet that I can modify my calling habits, and feel good about it, to save more than that $10.
To the moon,
Ralph |
