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.
The dubious consolidation economics of Frontier Economics
In its report ‘Assessing the case for in-country mobile consolidation’, prepared for the GSMA, Frontier Economics claimed “...that there is no evidence that prices increased following the merger” in Austria.
According to Frontier’s dubious methodology unit prices fall even when consumers are asked to pay more Euros every month to purchase the same amount of goods.
The fact is that before the merger, in December 2012, Austrian consumers paid €11 to purchase a smartphone plan with at least 1,000 minutes/SMS and 2 gigabytes. By February 2015 the price has doubled to €22.
[External article, The Economist GE Look ahead]
Net neutrality and why it matters (or not) for the digital economy. Based on Rewheel quotes and Digital Fuel Monitor analysis.
Reducing Wireless Competition in Europe
[External article, The New York Times]
A recent decision by European regulators to approve the merger of two cellphone companies in Germany will significantly reduce competition and encourage further consolidation in the industry. Citing Digital Fuel Monitor research.
Still not convinced that some EU telcos are trying to foreclose the mobile cloud storage market?
In this insight we take a closer look at telcos’ own zero-rated mobile cloud storage apps in Europe. What makes the mobile cloud storage market interesting from antitrust point of view is the fact that it is a well established, growing market with billions of Euros in annual revenues. A number of big internet companies like Google, Microsoft, Apple, Amazon and a plethora of start-ups such as Dropbox, Box, SugarSync, Mozy, CloudMe, justcloud, Carbonite, livedrive, Tresorit, Hightail, TeamDrive, Infinit, etc. are fighting for consumer attention in a competitive open market.
However, the mobile cloud storage market in Europe is just about to stop being open and competitive.
List of potentially anti-competitive zero-rated apps launched by EU’s incumbent telcos
On Gigaom: Forget fast lanes. The real threat for net-neutrality is zero-rated content
Incumbent European telcos are favouring their own or their OTT partners’ messaging, communication, music streaming, video streaming, mobileTV, cloud storage applications by zero-rating the generated volume i.e. volume generated by these applications does not deplete the end-user’s open internet gigabyte volume allowance. Zero-rating is essentially potentially blunt anti-competitive price discrimination. It favours telcos’ own, or their partners', applications and services thereby placing those offered by other competitors at a competitive disadvantage. In markets where big telcos face no challengers, such as Germany, and where the gigabyte prices for open mobile internet access are prohibitively expensive, price discrimination in favour of telcos’ own applications could be a game changer.
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?
Pre-Christmas price hike in the Greek protected oligopoly
While in EU’s competitive mobile markets consumer prices are falling and gigabyte allowances are increasing, in protected
oligopolies, such as Greece, operator pricing practices are defying economic logic. Between October and December
2013, so just ahead of the most important pre-Christmas sales season, all three Greek mobile operators have
simultaneously hiked the prices of their mass market post-paid smartphone tariffs.
Post-consolidation price hike in Austria
In this flash report we follow up on our EU27 mobile data cost competitiveness report May 2013 by reflecting on three recent market developments: consolidation in Austria (prices went up by over 60% on average), the planned acquisition of KPN E-Plus in Germany and EU's single telecom market regulation.
To offload or not to offload? The existential dilemma of mobile operators
Public WiFi networks are popping up like mushrooms in crowded spots where always connected geeks seek shelter for a frappuccino and a facebook update. This should be good news for mobile operators desperate from capacity shortfalls: they can now offload part of their data traffic to less expensive wholesale WiFi bit pipes – or they can even catch a free ride. So should mobile operators embrace the symbiosis and integrate externally cultivated WiFi hotpots in their business models?
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.