Pricing for telecommunications traffic usage and bridging service management strategy

Abstract

As needs for telecommunications services diversify, an increasingly wide range of telecommunications services is becoming available in the market. Any subscriber can find a service to satisfy his/her telecommunication requirements and competition between providers to retain heavy users is increasing. Service price reductions are one retention strategy, although price reductions for one service can affect the individual-level usage for other services. Price reductions can also be imposed on a service provider by regulation. For these reasons, understanding how price reductions affect service usage is of growing importance to the telecommunications industry for purposes of pricing and tariff development. In the first part, I develop an individual-level usage model for telecommunications services and analyze the effects on usage of a price reduction. I apply the model to individual-level traffic data for a Korean mobile telecommunication service provider. Finally, I develop a model to support a market segmentation and price reduction strategy. In the second part, I define a new concept the "Bridging Telecommunications Service" in the telecommunication service market. It is a service concept related to the substitution of consecutive generations of telecommunications services. The roles and characteristics of the Bridging Telecommunications Service are identified and the corresponding management strategies are developed. Management strategies are developed following the typical life cycle of the telecommunications service: strategy for a new service development process, marketing strategy, and service termination strategy. The management strategies developed in this part are examined and their implications are drawn in the two representative cases: CT -2 service in Korea and the PHS service in Japan.