Finding Savings by Pooling Your Corporate Data Cards

Two driving factors are surfacing more practical answers for data pooling. First, carriers are motivated to replace the older generation of unlimited data plans with new bounded data plan options and second, competitive pressures in the consumer/family arena are driving new data sharing choices that are undermining traditional corporate data plans. The carriers have responded with their first wave of corporate data sharing plans.  Though savings are not dramatic with these current offerings they are, for most corporate environments, a step in the right direction.

With the exception of Sprint who chooses to differentiate itself on the basis of unlimited data plans, the carriers are aggressively moving to create stepwise capacity-limited tiers or in yet other cases they are beginning to throttle throughput speeds once plan limits are reached.  Previously data pooling represented a sizeable risk due to high overage rates and the ready access to unlimited data plans.  Now that overage rates are less painful it is a rare case where companies won’t derive at least some savings benefits from data pooling.

With a limited number of data tier options for data cards (5GB and 10GB) it can be challenging to accomplish granular buffer tuning. The graph above differentiates three general bands representing slightly different approaches to pooling based on the average GB usage per data card.  Because the carriers sell the shared version of data plans at the same price as the non-shared ones there are some ‘no-brainer’ instances for data pooling.  If you are averaging less than 4.5 GBs across all your corporate data cards and you have a reasonably large population (> 100) then it makes no sense not to pool.  Putting everyone on a shared 5GB plan will be the same cost as leaving everyone on the 5GB individual plan but with added protection against overage charges.  Savings will come from users that would need 10GB plans to avoid overage or those that would otherwise incur overage charges on 5GB or 10GB individual plans.

For companies in the band that average between 4.5GBs and 9.5GBs per data device, data pooling is also advised but may require some monthly monitoring and maintenance to insure ongoing savings.  Once your data usage grows beyond the bounds of 5GB plans, your savings can now fluctuate based on your capacity to maintain cost effective buffers through a mix of 5GB and 10GB plans.  Look for our tip next week to learn more on the topic of setting correct data pool buffers.

In our experience it is rare that a pool of data cards would average > 9.5GBs but in this instance it is important to recognize the fact that carriers charge less for overage on individual plans ($10/GB) than they do for pooled plans ($15/GB).  What that means is if your usage is such that you are going to frequently incur overage charges even if every device is maxed out on a 10GB plan, then you may want to consider a mix of plans where the highest users are removed from the pool to benefit from lower overage charges of individual plans.

Not All Voice Devices Belong on Pooled Plans

The most cost-effective strategy for pooling is to use the optimal minute boundaries by pulling off the low and high minute users.  The low minute users can be put on flat rate plans and the high minute users are more cost effective on unlimited plans.  Your voice usage by device, if plotted on a graph like the figure below, would result in a similar looking bell curve.  The majority of devices will produce average monthly usage values that make them strong candidates for membership in a voice pool.  A small portion of devices that we call ‘Pool Busters’, will consume large minutes on a monthly basis.  The cost per minute of these devices is much more economical on the Unlimited Voice plans.  On the other end of the bell curve are devices with little or no voice usage.  These devices are candidates for Flat Rate (pay-per-minute) plans if available to you under your carrier contract.  Below is a conceptual bell curve illustrating our ‘rule of thumb’ break points for determining devices to include in the pool versus devices to place on non-pooled, alternatives plans.

A well-managed pool will typically have a cost/min between $0.06 and $0.12.  The cutover point between pooled and non-pooled devices will vary based on your available plans and your average usage levels.  Because pools have a way of balancing out devices with spikes by those with valleys in a given month, they are your most economical and safe choice for the majority of your voice devices.

The objective with high usage devices is to find a cost/min price point that is lower than your average pool cost/min.  With unlimited plans available for $69.99 or less, an average usage of 1500 minutes will generate a cost/min price point of < $0.05 were pool cost per minute are usually much greater than $0.07, which would be an extremely well-managed pool.  A cutoff point of 1500+ makes sense as long as you have pool tier plans available that let you reduce your overall pool buffer to < 15%.  If you cannot decrease your pool buffer by the commensurate amounts of usage you intend to remove from the pool for unlimited plans then you are going to increase, not reduce your voice costs overall. In these cases they are best left in your pool to chew up excessive buffer amounts.

The logic to define a cutoff point for low-end device usage is to find a voice plan option that is less expensive than the lowest cost plan to be in the pool.  If for example you have an Add-On pool plan for $20 and a Flat Rate plan with a $12 access charge and $0.10/minute rate then at 20 minutes of usage or less your Flat Rate option will be $14 or less, saving $6 or more a month ($12.00 + $2.00 based on 20 min x $0.10/min).  For both high-usage Unlimited devices and low-usage Flat Rate devices you need to monitor them frequently and shift them back into the pool if there usage moves well out of the high or low cutoff ranges or they can become more expensive out of the pool than in the pool.   Effective pool management techniques using a mix of pool and non-pool voice options can contribute 5-10% in voice pool savings.

Optimization Tip #2:  How to Construct a Minimum Cost Voice Pool

Of the major US wireless carriers, AT&T, Verizon and Sprint primarily incorporate a building block approach to constructing voice pools – a methodology that provides flexibility for pool resizing.  Each plan contributes a small, fixed number of minutes towards the pool (200, 450, 900, etc.). On the other hand, T-Mobile utilizes single bulk minute values per pool (5,000, 10,000, etc.) with devices all included on zero minute add-on plans.  This lends itself to less granular tuning of pool buffers.

Whether motivated by simplicity or by choosing an ‘everyone is equal’ cost allocation methodology, we most frequently find pools are comprised of a single standard minute tier – most commonly 450 minutes. Our experience is that companies with greater than 1000 devices typically average between 200 – 400 minutes/devices.  The larger the device count the more likely the average migrates downwards towards 300 minutes/device or below.  If you are lucky enough to have an AT&T or Sprint Business Essential Add On plan, you will have the most flexibility when reducing your pool size.  Verizon and Sprint’s current pool families commonly provide 200 minute plans at the low end. All carriers offer larger minute options of 2000, 4000 or even 6000 and the more you can incorporate these high minute plans, the lower your total pool cost.

To illustrate the savings opportunity of incorporating high minute plans let’s look at scenarios where we have 3000 devices with an average usage of 375 minutes/device and a 20% buffer.  We will do our calculations based on list price but the same economics will apply under your specific discounted rates.

In the table above all plan combinations end up with the same total number of pool minutes, 1,350,000.  A 5% monthly savings can be generated by building your pool with a combination of high minute plans balanced with the lowest minute plan offered versus choosing to place everyone on the same plan.  Using this approach of mixing plans may steer you towards a strategy we commonly use of pro-rating pool access charges based on pool minutes used.