Mobile data network economics metrics - 2016
We track spectrum holdings (in the 700, 800, 900, 1400SDL, 1800, 2100 and 2600 MHz FDD bands and the 2300 and 2600 MHz TDD), reported or estimated macro site numbers, mobile data volumes and a number of financial and operational metrics.
Here we present a subset of our spectrum and network economics metrics such as spectrum usage (expressed in MB/year/MHz/pop) and network capacity utilization (during busy hour in the 5% of most loaded sectors in the network). For key model inputs such as traffic geo-distribution, busy hour share of daily traffic and LTE spectral efficiency we use typical values observed in European mobile networks during our spectrum valuation and related consulting projects.
Mobile data usage per capita (i.e. mobile data volume divided by the country population) varies greatly across the EU28 & OECD countries.
The top six countries (Finland, Latvia, Austria, Denmark, Sweden and Estonia) with the highest mobile data usage per capita in 2016 were EU28 countries where consumers could buy unlimited mobile data for less than €30.
In the Greek tight mobile oligopoly where gigabyte prices are exorbitant mobile data usage per capita in 2016 was 37 times lower than in Finland.
While almost all EU28 countries have assigned spectrum in the harmonized 800MHz, 900, 1800, 2100 and 2600MHz bands in tight mobile oligopoly markets the assigned spectrum is hardly used due to the very high gigabyte prices.
In the Greek tight mobile oligopoly where gigabyte prices are exorbitant spectrum usage per capita (i.e. MB/year/MHz/pop, a measure of country or operator usage of assigned spectrum recourses) in 2016 was 38 times lower than in Finland.
Despite the exponential growth of mobile data traffic in many markets with unlimited data most European mobile operators utilized in 2016 a tiny fraction of their available network capacity.
In the Greek, Hungarian, Czech, Belgian and German tight mobile oligopoly markets where prices are high and data caps are very restrictive the average network capacity utilization during Busy Hour in the 5% of most loaded sectors in the network varied from 4% in Germany to 2% in Greece. Mobile networks in these countries are literally empty.
Fixed-to-mobile broadband substitution potential
Fixed-to-mobile broadband substiution
There are significant fixed-to-mobile broadband substitution gains (i.e. incremental 100 GB/month MBB users expressed as a % of country population that can be accommodated by operator available macro grid capacity) that can be realized if operators unleash the abundant capacity in their networks by offering unlimited data plans.
Mobile operators could carry today 100 GB per person per month and will soon have enough capacity (TDD/massive MIMO) for 200 GB per person per month or 500 GB per household.
Near zero marginal cost case in point: Elisa Finland
Near zero marginal cost
Despite incumbent telco groups’ warnings about the decoupling of network costs from service revenues, the exponential growth of mobile data traffic in unlimited markets did neither lead to the prophesized capacity crunch nor to unsustainable network investments.
Elisa’s network in Finland is a case in point. Elisa carries the highest mobile data traffic volume in the world in proportion of its size, still: while traffic increased twentyfold during the last six years, its CapEx and OpEx have stayed flat during the period.
The price of IP-based LTE hardware erodes fast, the capacity related network expenditures are increasingly driven by software licensing mechanisms. Software prices are always renegotiable.
Research reports and insights related to network economics and spectrum
Digital Fuel Monitor 7th
May 2017 (updated 22.05.2017)
The state of 4G pricing, mobile data usage, spectrum usage, network capacity utilization and fixed-to-mobile broadband substitution. After its comeback in 2016, in 2017 unlimited mobile data goes viral and spreads to 22 countries. And while in competitive markets such as France and Denmark consumers can buy 100 or unlimited gigabytes for less than €30, in tight mobile oligopoly markets such as Portugal, Greece and Hungary €30 hardly buys any gigabytes. Europe’s mobile data divide widens further: 200x more gigabytes for €30 in smartphone plans, 600x more gigabytes in mobile broadband plans, 200x difference in median gigabyte prices, 40x difference in mobile data usage per capita and spectrum usage.
EU’s 5G competition challenge
A handful of big telco groups – with vested interests in fixed-line broadband – impose very restrictive mobile internet usage caps. This raises serious concerns that these telco groups – that tightly control most EU national markets – will not be incentivised to sell competitively priced 5G internet access.
Telcos are killing net-neutrality with overly restrictive Gigabyte quotas, anyway
How much of its 4G and 5G radio spectrum capacities Europe should keep for open mobile internet access? How much for telcos' and their business partners' 'walled garden' video, cloud and m-health services (i.e. 'specialised services')
In those EU markets where competition between telecom operators can be best described as friendly net-neutrality is already on protracted coma – and the planned no-blocking & throttling rules of Neelie Kroes’s Connected Continent package will be no panacea. In protected telecom oligopolies (where no challenger mobile operator is present) all parallel fixed-line and mobile infrastructures and radio spectrum have already been or soon are to be consolidated in the hands of few friendly voice-era incumbent telecom groups with vested interests in protecting valuation of their fixed-line assets. In these markets telcos have already started to collectively restrict the maximum volume of open-internet on affordable smartphone tariff plans to just few Gigabytes. In contrast, in genuinely competitive markets, such as the UK, Finland and Austria, consumers could choose affordable (€15-€30) smartphone tariff plans that include very large (>10GB) or unlimited Gigabyte volume allowance.
Spectrum use in Finland and the UK versus Germany
According to data reported by the national regulatory authorities and presented in the first release (1H2014) of the Digital Fuel Monitor the average monthly mobile data consumption per capita varies greatly across EU28. In 2012 the Finnish consumed on average 1.49 Gigabyte every month while the British 0.38 Gigabyte. The Germans on the other hand consumed a dismal 0.15 Gigabyte every month. Why do consumers in competitive markets (where a challenger operator is present) consume up to 10 times more mobile data than consumers in protected markets such as Germany? Are Germans less eager users of the internet?
Are cellular operators running out of spectrum?
There is a common opinion in the industry that 3G/HSPA mobile data networks are congested because operators are running out of their spectrum resources. Considering the traffic demand, likely traffic geo-distribution, daily profile and the constrains of HSPA and LTE technology our models show that in typical mature mobile telecommunications markets spectrum scarcity alone does not cause a capacity crunch yet.
LTE - turning point in telecom infrastructure sourcing models
The budget of operators’ LTE investments is being squeezed by the challenging mobile data business case. In order to make economic sense, the cost of rolling out an LTE network cannot be more than a fraction of the money that has been spent on 3G rollouts. Moreover, the price of incremental capacity upgrades needs to be at least ten times lower than the typical price of adding comparable capacity to HSPA networks.