IDATE Mobile Data Pricing Sample

Telco Economics
Mobile data pricing

What pricing strategies for new
4G devices and plans?
M13519MRA September 2013
This report includes:

- a complete market report
- a PowerPoint slideshow
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> Basile CARLE, Senior consultant, Mobile devices and platforms expert
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Mobile data pricing: What pricing strategies for new 4G devices and plans?
Table of contents
1.
1.1.
Executive summary ......................................................................................... 9

Main findings .......................................................................................................... 9
1.2.
Pricing strategies for mobile data services: tiered pricing becoming the norm
worldwide 11
1.2.1.
1.3.
Upmarket services strategy: multipronged for multiple goals .............................. 15

1.3.1.
2.
Device-related strategies: data sharing and separating the service from the
device .................................................................................................................. 13
Prices all over the map ........................................................................................ 16
Pricing a key ingredient in any 4G strategy................................................. 17
2.1.
Status of superfast mobile .................................................................................... 17
2.2.
Marketing strategy vital to the success of 4G ...................................................... 20
2.3.
Users need clearer pricing ................................................................................... 20
2.4.
Report outline ....................................................................................................... 21
3.
3.1.
Mobile data pricing strategies ...................................................................... 22

Line strategies ...................................................................................................... 22
3.1.1.
3.1.2.
3.1.3.
3.1.4.
3.1.5.
3.2.
Superfast mobile pricing strategies ...................................................................... 27

3.2.1.
3.2.2.
3.3.
4.1.
Volume-based tiered pricing strategies ............................................................... 29

Strategies that combine tiered volume and speed ............................................... 30
Unlimited offers.................................................................................................... 31
Premium 4G strategies ........................................................................................ 34
4G must-have strategies ................................................................................... 37
Other innovative strategies .................................................................................. 38
Device strategies: unbundling device and services? ................................. 42

Are device subsidies dead? ................................................................................. 42
4.1.1.
4.1.2.
4.1.3.
4.2.
Operator benchmark ............................................................................................ 27

Two core strategies for superfast mobile ............................................................. 28
Innovative mobile data pricing strategies ............................................................. 29

3.3.1.
3.3.2.
3.3.3.
3.3.4.
3.3.5.
3.3.6.
4.
What is at stake ................................................................................................... 22

Pricing parameters .............................................................................................. 22
Volume and speed: central parameters for a product line ................................... 23
Operator benchmark............................................................................................ 23
Summary: overall shift to tiered pricing ................................................................ 25
What is at stake ................................................................................................... 42

Operator benchmark: subsidies and alternative strategies .................................. 45
Summary: subsidies decreasing, but still around................................................. 47
The shift to data sharing and dual SIM card plans ............................................... 48
4.2.1.
4.2.2.
4.2.3.
What is at stake ................................................................................................... 48

Overall benchmark .............................................................................................. 48
Summary ............................................................................................................. 50
www.idate.org IDATE 2013
4.3.
Innovative device strategies ................................................................................. 50

4.3.1.
4.3.2.
4.3.3.
4.3.4.
4.3.5.
4.3.6.
4.3.7.
4.3.8.
4.3.9.
5.
Offers that separate the device from the services ............................................... 50

Device replacement offers ................................................................................... 54
Device leasing ..................................................................................................... 55
Handset buyback offers ....................................................................................... 56
Plans built around the device............................................................................... 57
Working to increase tablet traffic on cellular networks ......................................... 58
Family plans ........................................................................................................ 60
Multiple device, multiple user data sharing plans ................................................ 60
Other data sharing possibilities............................................................................ 61
Service strategies .......................................................................................... 63
5.1.
What is at stake .................................................................................................... 63
5.2.
Operator benchmark ............................................................................................ 63
5.3.
Summary: multiple objectives .............................................................................. 64
5.4.
Innovative content strategies ............................................................................... 66

5.4.1.
5.4.2.
5.4.3.
5.4.4.
5.4.5.
5.5.
Plans to better compete with OTT ........................................................................ 69

5.5.1.
5.5.2.
5.5.3.
5.5.4.
5.6.
6.1.
AT&Ts insurance services .................................................................................. 74

NTT DOCOMOs multi-platform service strategy ................................................. 74
Pricing analysis ............................................................................................. 75

Data allowances ................................................................................................... 75
6.1.1.
6.2.
A1: navigation options ......................................................................................... 72

Mobile payment by TeliaSonera Sweden ............................................................ 72
Orange France: differentiation through upmarket services .................................. 72
Plans aimed at increasing ARPU ......................................................................... 74

5.7.1.
5.7.2.
6.
Verizons paid cloud solutions ............................................................................. 69

RCS: Rich Communication Services ................................................................... 70
H3G UK: application-centric strategy................................................................... 71
Oranges social networking offer ......................................................................... 71
Plans to stand out from the competition ............................................................... 72

5.6.1.
5.6.2.
5.6.3.
5.7.
LG U+: stand out from the competition with value-added services ...................... 66
Verizon: switching from a proprietary video platform to third-party services ........ 67
TIMs multi-device content strategy ..................................................................... 68
TeliaSonera audiobooks ...................................................................................... 69
H3Gs film-centric plan ........................................................................................ 69
Close to 2 Gb of data traffic a month on laptops in advanced countries .............. 76
Price ..................................................................................................................... 77
6.2.1.
6.2.2.
6.2.3.
Subscription prices .............................................................................................. 77

Price elasticity according to data allowance ........................................................ 78
Price per Gb ........................................................................................................ 81
7.
Data book ....................................................................................................... 82
7.1.
Austria .................................................................................................................. 82
7.2.
France .................................................................................................................. 83
7.3.
Germany ............................................................................................................... 83
7.4.
Italy ....................................................................................................................... 84
7.5.
South Korea ......................................................................................................... 85
7.6.
Spain .................................................................................................................... 85
7.7.
Sweden ................................................................................................................ 86
7.8.
United Kingdom .................................................................................................... 87
7.9.
USA ...................................................................................................................... 88
Tables
Table 1:
Table 2:
Table 3:
Table 4:
Table 5:
Table 6:
Table 7:
Table 8:
Table 9:
Table 10:
Table 11:
Table 12:
Table 13:
Table 14:
Table 15:
Table 16:
Table 17
Table 18:
Table 19:
Table 20:
Table 21:
Table 22:
Table 23:
Table 24:
Table 25:
Table 26:
Table 27:
Table 28:
Table 29:
Table 30:
Table 31:
Table 32:
Table 33:
Table 34:
Table 35:
Table 36:
Table 37:
Table 38:
Table 39:
Table 40:
Table 41:
Table 42:
Table 43:
Table 44:
SWOT analysis of key strategies for mobile data plans .................................................. 12

SWOT analysis of key device-related strategies ............................................................. 14
SWOT analysis of key upmarket service strategies ........................................................ 15
Status of LTE at the end of 2012 .................................................................................... 17
Recap of mobile telephony technologies ........................................................................ 19
How users perceive mobile data pricing schemes .......................................................... 20
Parameters used to price mobile data services .............................................................. 22
Postpaid mobile data plans associated with a smartphone............................................. 23
Superfast mobile line strategies (for postpaid smartphones) .......................................... 27
T-Mobile DE line for smartphones .................................................................................. 30
T-Mobile DE line for tablets ............................................................................................ 31
Sprints mobile service plans .......................................................................................... 31
Pricing for Swisscoms Natel Infinity range ..................................................................... 33
Comparison of Orange/EE SIM-only postpaid plans (12-month contract)....................... 34
A1 range for smartphones .............................................................................................. 35
Orange Frances Origami Play line ................................................................................. 36
Vodafone Germanys fixed line replacement plans ......................................................... 38
Vodafone DE line for smartphones ................................................................................. 39
Vodafone DE data only plans ......................................................................................... 39
Pricing of T-Mobile UK plans with 1 Gb of data .............................................................. 40
H3G SIM-only plan pricing .............................................................................................. 40
Average handset prices worldwide, excluding subsidies ................................................ 43
Regulatory initiatives ....................................................................................................... 44
Benchmark of operators device strategies for postpaid mobile data plans associated
with a smartphone .......................................................................................................... 45
Operators device-related initiatives ................................................................................ 47
Group and multi-device mobile data plans (postpaid associated with a smartphone) ..... 49
Growth of mobile subscriber numbers in Spain .............................................................. 52
TDC handset sales: financial data .................................................................................. 53
Comparison of subsidised iPhone 5 offers in France ...................................................... 53
Vodafone UKs device leasing offer ................................................................................ 55
SFRs RED and CARRES plans ................................................................................... 57
SFRs postpaid plans ...................................................................................................... 59
Verizons "Share everything" price tiers by data allowance ............................................ 60
Cost per device in a data sharing plan ............................................................................ 61
TeliaSoneras product range ........................................................................................... 61
H3G UKs MiFi plans....................................................................................................... 62
Upmarket services sold by mobile operators .................................................................. 63
Upmarket service strategies by goal ............................................................................... 65
LG U+ LTE smartphone plans ........................................................................................ 66
LG U+ subscriber numbers, ARPU and market share .................................................... 67
TIMs content offerings.................................................................................................... 68
Orange Origami line (postpaid flat rate, SIM-only, 12-month contract) ........................... 73
Breakdown of supplementary revenue streams (billion YEN/) ...................................... 74
Average monthly consumption by type of device ............................................................ 76
***
Figures
Figure 1:
Figure 2:
Mobile data pricing strategies ......................................................................................... 10

Price per Gb (min/max) for plans with no handset subsidy, and including unlimited calling
and SMS, in July 2013 .................................................................................................... 16
Figure 3:
Number of LTE subscribers for a selection of operators, at the end of 2012 .................. 19
Figure 4:
LTE market share in the United States, by number of subscribers ................................. 26
Figure 5:
Telcos product line strategies for mobile data services .................................................. 26
Figure 6:
4G product line strategy, depending on coverage rate ................................................... 28
Figure 7:
Verizons 4G upgrade offer ............................................................................................. 29
Figure 8:
E-Plus BASE line in Germany......................................................................................... 30
Figure 9:
Sprints unlimited plan ..................................................................................................... 31
Figure 10:
T-Mobile USA plan .......................................................................................................... 32
Figure 11:
Swisscoms NATEL range .............................................................................................. 33
Figure 12:
How Infinity plans affect ARPU ....................................................................................... 34
Figure 13:
Telekom Austrias A1 plans ............................................................................................ 36
Figure 14:
TIMs 4G plan ................................................................................................................. 36
Figure 15:
Orange France superfast network option ........................................................................ 37
Figure 16:
M1 plans ......................................................................................................................... 37
Figure 17:
Telenors entry-level 4G plan in Sweden ........................................................................ 38
Figure 18:
Vodafone Germanys calling and internet access plan ................................................... 39
Figure 19:
NTT DOCOMOs "Xi Pake-hodai double" plan: flat rate + usage .................................... 41
Figure 20:
Breakdown of NTT DOCOMOs Xi plans ........................................................................ 41
Figure 21:
Market share by type of smartphone in the UK, Q1 2013 ............................................... 43
Figure 22: Change in the average retail price of a handset ................................................................... 43
Figure 23:
Monthly wireless ARPU and ARPC................................................................................. 50
Figure 24:
O2 Refresh plan: separating the phone from the airtime ................................................ 51
Figure 25:
T-Mobiles separate phone sales .................................................................................... 51
Figure 26:
Vodafones no-fee instalment plan for handsets ............................................................. 52
Figure 27:
TDCs monthly instalment plan for handsets ................................................................... 52
Figure 28:
Frees handset subsidy offer ........................................................................................... 53
Figure 29:
Vodafones postpaid rate plan for an iPhone 5 ............................................................... 54
Figure 30:
T-Mobiles Jump! handset upgrade offer......................................................................... 55
Figure 31:
Vodafone UKs device leasing offer ................................................................................ 55
Figure 32:
O2s device leasing offer................................................................................................. 56
Figure 33:
Vodafone UKs buyback offer ......................................................................................... 56
Figure 34:
O2 UKs buyback offer .................................................................................................... 56
Figure 35:
SFRs device-centric strategies ...................................................................................... 57
Figure 36:
TIMs range of plans ....................................................................................................... 58
Figure 37:
SFRs MultiSurf dual SIM card option ............................................................................. 59
Figure 38:
Verizons data sharing plan............................................................................................. 61
Figure 39:
How a mobile hotspot works ........................................................................................... 62
Figure 40:
Value-added service strategies by goal .......................................................................... 65
Figure 41:
LG U+ gaming and HDTV services ................................................................................. 67
Figure 42: Navi U+ from LG U+ ............................................................................................................. 67
Figure 43:
Verizons Viewdini platform ............................................................................................. 68
Figure 44:
TIMs Cubolibri plan ........................................................................................................ 68
Figure 45:
Joyn screen grab ............................................................................................................ 70
Figure 46:
H3G UKs app portal ....................................................................................................... 71
Figure 47:
The Orange France FamilyWall offer .............................................................................. 71
Figure 48:
A1s navigation service for drivers .................................................................................. 72
Figure 49:
TeliaSoneras premium service line ................................................................................ 72
Figure 50:
Figure 51:
Figure 52:
Figure 53:
Figure 54:
Figure 55:
Figure 56:
Figure 57:
Figure 58:
Figure 59:
Oranges Origami line ..................................................................................................... 73

AT&Ts Mobile protection pack ....................................................................................... 74
NTT DOCOMOs high-end services ................................................................................ 74
Data allowances for postpaid smartphone plans (mini-maxi) .......................................... 76
Price range for postpaid, SIM-only smartphone plans, not including subsidies .............. 77
Price elasticity according to data volume ........................................................................ 78
Verizons per-Gb price, according to data sharing plan allowances ................................ 79
EEs per-Gb price, according to data allowance ............................................................. 79
Price elasticity of data-only plans .................................................................................... 80
Price per Gb for plans with no handset subsidy, and including unlimited calling and SMS ........ 81
2.2.
Marketing strategy vital to the success of 4G

In these tough economic times, 4G rollouts represent a unique opportunity for telcos to
create new sources of income and, for some, to turn the tide on their shrinking revenue, in
addition to optimising the management of their network.
The success of any 4G strategy will be influenced by several factors, including:
available spectrum, with the necessary expenditures to acquire radio resources or employ
frequency bands for which they already have a license;
technological choices which will shape their investments and their ability to optimise their
systems;
network rollouts, and especially the pace of their NGA deployments which make it
possible to provide consumers with operational coverage, but also require massive
expenditures. For operators, this could be the right time to forge financial and/or
operational partnerships to share the financial burden;
availability of 4G devices, a crucial ingredient to kick-start the market, and one of the
reasons why Europe is lagging behind;
and, lastly, sales and marketing which are a fundamental part of any 4G plan which, in
and of itself, is nothing new. What they are selling is mobile throughput, i.e. faster
download speeds and better quality voice calls with VoLTE (voice over LTE). From there,
telcos need to convince customers to upgrade from 3G to 4G, and to offer something the
competition does not. The way their product lines are structured and priced, especially
compared to 3G, are key to the success of a superfast mobile strategy. Another central
consideration is customers acquisition of LTE-ready handsets, which will heavily influence
telcos subsidy strategies.
2.3.
Users need clearer pricing

Consumers often find themselves overwhelmed by the many parameters that go into the
design of mobile service plans (voice and SMS, data allowance, speed, add-on services).
1
According to a recent survey of 6,000 mobile customers in 12 countries, one in three
consumers finds mobile pricing unclear, or does simply not understand the options available
to him. This is especially true of older consumers: only 46% of customers between the ages
of 46 and 65 understand mobile pricing, compared to 70% of 18 to 24-year olds.
This lack of understanding is naturally having a negative impact on consumption: more than
a third (38%) of mobile data users cut down on their web browsing because they are afraid
of going over their monthly allowance.
So providing customers with clear pricing schemes is a central challenge for mobile
operators who need to appeal to every mass market segment.
Table 6:
How users perceive mobile data pricing schemes
How well do you understand the mobile data tariffs offered by your mobile
operator?
Not at all
effectively
Details are confusing and cant make a judgment of what value

they offer or which the best option is
10%
Not very effectively
Dont understand some of what is being offered and is difficult to

make a judgment of what value they offer and which the best
option is
22%
Quite effectively
Understand most of what is on offer and can make a reasonable

judgment of what value they offer and which the best option is
36%
Very effectively
Understand perfectly what is on offer and can make an accurate

judgment of what value they offer and which the best option is
20%
Dont know
12%
Source: Ernst Young, October 2012

1
Ernst Young, October 2012
20
2.4.
Report outline
In this report, we will provide a detailed analysis of telcos pricing strategies for mobile data
services, and particularly from superfast access. This will include an examination of leading
carriers product lines.
The report is made up four parts:
pricing strategies for mobile data services, with particular focus on 4G strategies
operators strategies with respect to devices
strategies for services bundled with access
pricing analysis summary, with an Excel database providing detailed data
And, for each of the first three parts:
a summary of what is at stake,
operator benchmark for Europe, the United States and Asia (Japan and South Korea),
our analysis in a nutshell,
a description of several innovative approaches found in the marketplace.
21
Telenor Sweden: 4G only offer

In Sweden, Telenors range of plans are broken down by data allowance, from 100 Kb to 6
Gb, and by speed. The most basic 4G plans (XS) deliver a data rate of 10 Mbps and include
an allowance of 500 Kb of data.
Figure 17:
Telenors entry-level 4G plan in Sweden
Source: Telenor Sweden
3.3.6.
Other innovative strategies

Vodafone Germany: LTE as a replacement for fixed access
Regulatory considerations
Germanys national regulatory authority, BnetzA, has required that operators with licenses to
the 800 MHz band begin deploying their LTE network in rural areas that are without fixed or
mobile broadband coverage, before they continue their rollouts in more densely populated
parts of the country. Four types of area of have been defined:
Priority area 1: population under 5,000 inhabitants
Priority area 2: population of 5,000 to 20,000
Priority area 3: population of 20,000 to 50,000
Priority area 4: population of over 50,000
Coverage in each area must reach 90% before rollouts in the subsequent area can proceed,
and operators must have reached 90% coverage of all the areas by 2016. To achieve this,
BnetzA is encouraging operators to cooperate with one another and pool their resources.
Vodafone Germanys line
Vodafone, which controls a third of Germanys market, sells a line of LTE plans as
replacements for fixed lines, with data allowances ranging from 10 to 30 Gb, and at speeds
of 7 to 50 Mbps.
Table 17
Vodafone Germanys fixed line replacement plans
Data volume (Gb)

Network
Speed (Mbps)
Price/month ()
10
LTE
7.2
20
15
LTE
21.6
30
30
LTE
50
40
Source: Vodafone
38
4.
Device strategies: unbundling device

and services?
The device market is being shaped by the surging popularity of smartphones, which are
coming to replace feature phones, and by the growing use of additional devices like tablets.
In this section, we look at two specific device-related developments: data sharing plans that
allow users to have several devices share a single plan, and the issue of subsidies. Both of
these developments are playing out against a growing trend of separating devices and
services.
The availability of LTE devices is also a vital issue for telcos: in Europe, the lack of LTEready handsets that are compatible with the frequency bands used by operators there has
been a major obstacle to the markets growth. Most notably, the iPhone 5 is still not
compatible with the 800 MHz and 2600 MHz bands used by a number of European telcos.
We will not explore this issue in depth here, however.
4.1.
Are device subsidies dead?
4.1.1.
What is at stake
Smartphone subsidies key to boosting consumption
The issue of subsidising devices is a weighty one for telcos: given that average revenue per
user (ARPU) for a smartphone is roughly double what it is for a feature phone (source:
GSMA), the goal is to have a maximum number of customers equipped with a smartphone,
to build up the mobile data market and increase the resulting revenue. It is the same logic
that is driving superfast mobile, as customers need to be equipped with LTE-compatible
devices. Subsidies are also a way of winning over early adopters with upmarket devices.
Subsidised handsets are generally attached to a one or two-year service contract, which is a
way of paying for the device, and allows telcos to secure their customers loyalty. In some
countries, notably the United States, the SIM card on subsidised handsets is locked, which
prevents customers from switching providers.
In addition, subsidies are chiefly the dominion of the postpaid market, and can be an
essential tool for convincing pay-as-you-go customers to switch to a postpaid plan, which is
more advantageous for operators.
An artificially high-end smartphone market

In the smartphone market, subsidies create a real bias towards top tier handsets. In the UK,
for instance, high-end models (iPhone 5, Galaxy SIII, Nexus 4) represent 30% of the
smartphones sold. If we add in the iPhone 4S and the Galaxy SII, they account for 41% of
the market which is very unusual for a consumer market, even if smartphones in and of
themselves represent the high end of the mobile phone market.
This trend is found in developed countries, whereas globally, and especially in BRIC (Brazil,
Russia, India, China), the markets growth is being spurred by low-cost smartphones.
42
Figure 21:
Market share by type of smartphone in the UK, Q1 2013
Note: smartphones sold in the UK in Q1 2013
Source: Kantar Panel
Increasingly high cost for operators

Subsidising these devices has become an increasingly expensive endeavour for operators,
and is tending to increase as smartphones grow in popularity with high-end devices
remaining just as popular. But the arrival of new smartphones like the Windows Phone and
the latest BlackBerry is likely to increase competition and bring prices down.
The average price of a smartphone, worldwide, was around 270 in 2012, and even if prices
are tending to drop as new low-cost models come on the market in emerging countries, the
average price of a mobile phone has nevertheless risen from 99 in 2009 to 160 in 2012.
Operators margins on these devices are slim, which naturally affects their gross margins
and their bottom line.
Table 22:
Average handset prices worldwide, excluding subsidies

()
Feature phone
Smartphones
Mixed
Smartphones share of total sales
2009
2010
2011
2012
70
261
99
15.1%
71
246
111
22.7%
67
291
135
30.4%
61
268
160
48.0%
Source: IDATE
Figure 22: Change in the average retail price of a handset
()
160
135
99
2009
111
2010
2011
2012
Source: IDATE
43
5.5.3.
H3G UK: application-centric strategy

In the UK, H3G does not offer content packages, but rather a range of pre-selected apps.
Worth noting that in the middle of the suggested apps is a recommendation to upgrade to an
unlimited plan.
Figure 46:
H3G UKs app portal
Source: H3G
5.5.4.
Oranges social networking offer

Orange has an application called FamilyWall that serves as both social networking site and
cloud service. Users create an account to share messages, photos and a family events
calendar, in an ad-free environment. The free version of the app includes 100 Mb of storage,
and the premium version includes 5 Gb of storage for 2/month but free for Orange
quadruple play customers. Connection costs are also included in this option.
Figure 47:
The Orange France FamilyWall offer
Source: Orange
71
6.
Pricing analysis
We have applied the following parameters to our pricing analysis:
Plans:
- plans associated with a smartphone
- postpaid
- 12-month contract
- no device subsidy: SIM-only or bring your own device (BYOD) offers
- including unlimited voice calls and SMS (insofar as possible, not all telcos in Sweden,
Austria and the UK sell unlimited offers, in which case we selected the highest number of
calling minutes on offer).
Price:
- price for new customers
- excluding promotional offers
- excluding bundles with a fixed line plan
- prices are rounded up
- prices listed on the operators website
- for the months of June-July 2013.
6.1.
Data allowances
In the following graph we find four main types of operator:
operators playing the unlimited card: T-Mobile and Sprint in the United States,
T-Mobile and H3G in the UK, and Swisscom;
operators that offer large data allowances and are the furthest along in their LTE
rollouts:
- starting with US telcos Verizon and AT&T, which offer plans with an allowance of up to 50
Gb, but only for their data sharing plans
- South Korean operators, with LG U+ selling plans with allowances of up to 24 Gb
- in the UK, operator EE with a 20 Mb plan; in Italy, TIM and H3G with, respectively, a
20 Gb and 30 Gb monthly data allowance;
- and more modest offers of 10 Gb of data a month from TeliaSonera and Vodafone
Germany;
most other telcos with data allowances ranging from 500 Mb to 5 Gb;
and lastly those operators that emphasize their basic plans: O2 in the UK with two
plans of 1 Gb and 2 Gb, and Movistar in Spain with a single plan offering 1 Gb of data.
75
7.7.
Sweden
Pricing of mobile data services in Sweden (July 2013)
Operator
Data
volume
(GB)
Monthly
allowance
(loc curr)
Monthly
allowance
(EUR)
Price/GB
(local
curr)
Price/GB
(EUR)*
Unlimited
0.5
200
23.0
400.0
46.0
Unlimited
300
34.5
150.0
17.2
Term. subs.
Unlimited
400
46.0
100.0
11.5
Term. subs.
Unlimited
500
57.4
83.3
9.6
XL
Term. subs.
Unlimited
10
600
68.9
60.0
6.9
Data only
200
23.0
50.0
5.7
Data only
300
34.5
37.5
4.3
Data only
12
400
46.0
33.3
3.8
Offering
Terminal
subsidy
XS
Term. subs.
Term. subs.
Voice,
SMS
Network
(3G,LTE,
4G, UNS)
Telenor
Telia
Term. subs.
300 mn,
300 SMS
4G
0.5
199
22.9
398.0
45.7
Term. subs.
1500 mn,
SMS
4G
349
40.1
116.3
13.4
Term. subs.
10000 mn,
SMS
4G
549
63.1
91.5
10.5
Data only
4G
99
11.4
49.5
5.7
Data only
4G
199
22.9
Data only
4G
299
34.3
49.8
5.7
Data only
4G
349
40.1
43.6
5.0
Data only
4G
10
399
45.8
39.9
4.6
*Cf. box on page 89 on Hypotheses for establishing per-gigabyte prices
Source: IDATE, based on Web sites
86
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Telco Economics

Mobile data pricing

This report includes:

IDATE creates the DigiWorld Institute

Copyright IDATE 2013, CS 94167, 34092 Montpellier Cedex 5, France

Executive summary ......................................................................................... 9

Upmarket services strategy: multipronged for multiple goals .............................. 15

Prices all over the map ........................................................................................ 16

Pricing a key ingredient in any 4G strategy................................................. 17

Status of superfast mobile .................................................................................... 17

Marketing strategy vital to the success of 4G ...................................................... 20

Users need clearer pricing ................................................................................... 20

Report outline ....................................................................................................... 21

Mobile data pricing strategies ...................................................................... 22

Superfast mobile pricing strategies ...................................................................... 27

Volume-based tiered pricing strategies ............................................................... 29

Device strategies: unbundling device and services? ................................. 42

Operator benchmark ............................................................................................ 27

Innovative mobile data pricing strategies ............................................................. 29

What is at stake ................................................................................................... 22

What is at stake ................................................................................................... 42

What is at stake ................................................................................................... 48

www.idate.org IDATE 2013

Innovative device strategies ................................................................................. 50

Offers that separate the device from the services ............................................... 50

Service strategies .......................................................................................... 63

What is at stake .................................................................................................... 63

Operator benchmark ............................................................................................ 63

Summary: multiple objectives .............................................................................. 64

Innovative content strategies ............................................................................... 66

Plans to better compete with OTT ........................................................................ 69

AT&Ts insurance services .................................................................................. 74

Pricing analysis ............................................................................................. 75

A1: navigation options ......................................................................................... 72

Plans aimed at increasing ARPU ......................................................................... 74

Verizons paid cloud solutions ............................................................................. 69

Plans to stand out from the competition ............................................................... 72

Close to 2 Gb of data traffic a month on laptops in advanced countries .............. 76

Subscription prices .............................................................................................. 77

www.idate.org IDATE 2013

Data book ....................................................................................................... 82

South Korea ......................................................................................................... 85

United Kingdom .................................................................................................... 87

www.idate.org IDATE 2013

SWOT analysis of key strategies for mobile data plans .................................................. 12

www.idate.org IDATE 2013

Mobile data pricing strategies ......................................................................................... 10

www.idate.org IDATE 2013

Oranges Origami line ..................................................................................................... 73

www.idate.org IDATE 2013

Marketing strategy vital to the success of 4G

Users need clearer pricing

How users perceive mobile data pricing schemes

Details are confusing and cant make a judgment of what value

Not very effectively

Dont understand some of what is being offered and is difficult to

Understand most of what is on offer and can make a reasonable

Understand perfectly what is on offer and can make an accurate

Source: Ernst Young, October 2012

Ernst Young, October 2012

www.idate.org IDATE 2013

www.idate.org IDATE 2013

Telenor Sweden: 4G only offer

Telenors entry-level 4G plan in Sweden