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.