Cybersmart has recently launched its first uncapped ADSL products, and Cybersmart CEO Laurie Fialkov said that they were surprised by the phenomenal take-up of their uncapped offerings.
“We were working under the premise that most users knew how much they were using in the month and would opt for a capped product, which for low usage users can be much cheaper. This premise is completely false,” said Fialkov.
“Most people – low- and high-end users – do not want to know how many gigs they use and would rather pay a fixed amount each month even if they could save money using a capped product.”
Fialkov said that they have had a large number of conversions from capped accounts to their new uncapped accounts in the first month.
“This was quite scary because we had no idea how that was going to impact on our top up revenue,” said Fialkov. “Luckily the average revenue received for an uncapped customer is much higher than a capped customer, which more than compensated for lost top up revenue.”
“At the rate the conversions are happening, there will be very few customers left on a capped product in 6 months time.”
No surprises in usage trends
Fialkov said that the bandwidth usage trend that they currently see is pretty consistent with what they saw when they tested an uncapped product a few years back.
“8% of the users can use up to 50% of the available bandwidth, and if you do not have equipment to manage them it can make the product unsustainable.”
“We have seen a very obvious change in how a customer uses the internet when he is on a capped versus uncapped account. Once a customer knows that his cost is fixed, business uncapped users are prepared to invest in various internet technologies,” Fialkov explained.
“While capped business users are reluctant to use VoIP or virtual PABX systems, do remote backups, or move parts of their business into the cloud, an uncapped user embraces these technologies and is on the lookout to see what else he can do online.”
“The home uncapped user seems to be on a mission to find alternate media content – be it online radio stations in other countries or finding sport and entertainment channels that aren’t broadcast here,” said Fialkov.
Fialkov said that the most surprising trend from a new account perspective, is that the requirement for business uncapped accounts and home uncapped accounts is almost equal, even though the home product is much cheaper than the business product.
“I can only guess that the reason for this is that we have published our contention ratios along with the product. Contention ratios are now widely understood, so customers are prepared to pay more for a business product and get a much lower contention and therefore a much better experience,” argues Fialkov.