Rewheel-Tutela research study. Analysis of 99 mobile networks across EU28, Norway and Switzerland, key network performance drivers and implications on 5G infrastructure and spectrum investment strategies.

In-depth comparison of 4G prices and gigabytes in the 3-MNO consolidated German versus the 4-MNO UK, French and Italian markets – implications for the German 5G market.

The less (3 versus 4) mobile network operators present in a market the higher (2x) the market price. The higher the mobile market concentration the higher the market price.

Can Iliad make money by charging only €7.99 per subscriber? What is the minimum ARPU level that Iliad will need in order to break even in a reasonable period?

Are there any remedies that can remove the short and long term competitions concerns entirely?

With special focus on US prices ahead of the planned 4 to 3 consolidation. How many 4G gigabytes €5, €10, €15, €20, €25, €30, €40, €50, €60, €70 and €80 could buy in EU and OECD markets on smartphone and data-only plans.

A study of 80 European, US, Japanese, Korean, Australian and New Zealand mobile operators. Topical for operators contemplating fixed-to-mobile broadband substitution ahead of upcoming 700, 1400 (SDL), 2300, 3400-3800 MHz spectrum auctions.

In June 2018 Elisa became the first operator in the world to launch commercial service over its 5G (3.5 GHz) network in Tampere Finland and Tallinn Estonia. Elisa invited Rewheel to try its 5G network.

Four months after Deutsche Telekom announced the acquisition of Tele2 by T-Mobile in the Netherlands and few days before the parties notified the 4 to 3 mobile merger to the European Commission Tele2 unexpectedly increased prices.

How many 4G gigabytes €5, €10, €15, €20, €25, €30, €40, €50, €60, €70 and €80 could buy in EU and OECD markets on smartphone and data-only plans. What a difference a 4th mobile network operator makes!

Paradigm change in mobile technology leads to paradigm change in spectrum valuations (observations after the UK auction).

As we asserted back in 2015 the merger mandated so called ‘capacity’ MVNOs did not become effective competitors.

After a comeback in 2016 unlimited mobile data has spread further during 2017.

European winners and losers in 4.5G and 5G – study of 30 operators. Will mobile network CAPEX stay flat in the long run? Spectrum valuation implications.

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.

In March 2017 Telefonica O2 Germany announced 3.5 GHz (they have 83 MHz) Massive MIMO (= very high capacity LTE macro sectors) field trials with Huawei for wireless home broadband and 4K video. Our models predict that O2's macro site grid and spectrum resources (FDD+TDD) could allow it to drive fixed-to-mobile broadband substitution in Germany by connecting millions of households with HD TV service on its high capacity LTE network.

When LTE base stations are upgraded to 'Gigabit' speed the gigabyte volume capacity of the networks also greatly expands. We modelled LTE network capacity based on existing FDD and TDD spectrum holdings (and potential acquisitions in 2.3 and 3.4-3.8 GHz bands) and sizes of the macro site grids. Without and with Massive MIMO in the TDD bands. Topical for operators contemplating fixed-to-mobile broadband substitution ahead of upcoming 700, 1500 (SDL), 2300, 3400-3600 MHz spectrum auctions.

The gap between gigabyte prices in the 4 to 3 consolidated Austrian & German markets and prices in 4-MNO markets where no consolidation has taken place had substantially increased by September 2016

Fixed-line broadband interest, zero-rating video and big telco ownership impedes competition in mobile markets

UPDATED with DG Competition's response to Rewheel's concerns. How low should the wholesale data roaming cap be in 2017 to avoid the distortion of competition in North-Eastern domestic mobile markets where retail gigabyte prices are competitive?

Full release report for Digital Fuel Monitor-PRO clients

This research report was submitted to Commissioner Vestager and DG Competition on 30th May 2016, three months prior to the European Commission's announcment (link) of approving the merger subject to remedies.

Before the blocked merger £25 bought O2 customers 8 gigabytes. Now O2 customers get three times more gigabytes i.e. 25GB by spending £25

The Commission proposed wholesale data roaming cap of €8.5/GB appears to be carefully calibrated to protect the very high domestic retail prices charged by operators in tight oligopoly markets (e.g. Germany, Spain) while penalizing operators with competitive much lower domestic retail prices (e.g. Finland, Denmark, Poland)

In 2016 mobile data volume consumption per person in Finland is set to exceed fixed-line broadband volume consumption per person in Germany. Anecdotal evidence reported by WDR (German public media) indicated that younger users are frustrated by very restrictive smartphone plan volume caps.

Public release summary

Telenor’s Danish strategy is in tatters. Telenor’s 4 to 3 consolidation attempt was blocked by the European Commission while its ‘me too’ strategy has been a failure dragging down its profitability. Can Telenor turn the business around and return to profitability?

Before the merger Austria was ranked as the 3rd most competitive mobile market among EU28. Three years after the merger Austria has fallen to the 10th place.

Denmark vs Germany. Decoupling of mobile internet access prices and gigabyte consumption.

Unit prices (retail price / GB volume allowance) ≠ Unit revenues (revenues / actual GB consumption)

The average gigabyte price in Denmark is now 63% lower than it was in April 2015 when the European Commission opened an in-depth investigation

Comprehensive analysis of commercial and merger mandated MVNO wholesale access frameworks and assessment of their efficacy in restoring effective competition in 4 to 3 mobile mergers

Hutchison appears to be confident that price increases will not deter the European Commission from approving the 4 to 3 merger

Comprehensive analysis of factors that give rise to unilateral anti-competitive effects leading to non-competitive outcomes and consumer harm in tight mobile oligopolies.

The statement above is our interpretation of the motive behind the launch by the KPN group in one of its markets of “truly mobile” smartphone plans with enough mobile internet gigabytes to “live completely mobile”.

Public release summary

Before the planned merger a Danish operator was selling in Denmark a 4G LTE smartphone plan with 100 gigabytes for €39. Ahead of the planned merger the operator slashed the gigabytes down to 20 while keeping the price the same. After the merger was blocked the operator doubled the maximum gigabytes on its smartphone plans by launching a plan that packs 40 gigabytes.

- Ahead of its planned merger with Wind in Italy Hutchison Three has halved the gigabytes in its flagship 4G LTE smartphone mobile internet access plan and launched its own zero-rated (unlimited gigabytes at €0/GB) film store.

Ahead of its planned merger with Telefonica O2 in the UK Hutchison Three has more than doubled (+113%) the price of its flagship 4G LTE smartphone plan.

There are substantial empirical market evidences supporting the notion that close to half of EU’s mobile markets exhibit tight oligopoly non- or sub-competitive market outcomes.

Triggered by the planned mergers in the UK, Commissioner Vestager’s assertion that “In fact, infrastructure investment can be stimulated by competition” and by the court challenge filed by Airdata AG against the Commission’s unlawful approval of Telefonica E-Plus German merger we take a closer look at effective competition and in particular 4G LTE mobile internet access (smartphone plan) prices and hotspot/tethering restrictions in the consolidated German protected oligopoly, UK and France.

In this premium research note we present the 10 gigabyte basket EU28 & OECD country and operator ranking for 4G LTE unlimited (>1,000) minute & SMS smartphone plans that include hotspot/tethering functionality for the entire volume. MVNOs are not competitive!

4G LTE smartphone plans with 100 or unlimited gigabyte volume are promoted by European mobile operators as the ultimate packages for connecting computers and tablets and streaming movies while at home. Affordably priced 100, 200, 500 or unlimited gigabyte 4G LTE data only home broadband plans - Cheaper than cable.

Public release summary

Smartphone tariff price competitiveness snapshots between December 2012 and May 2015. Before the price hikes that followed approval of Hutchison’s and Orange’s merger Austria used to rank as the country in EU28 with the second lowest 4 gigabyte smartphone tariff basket price. Now prices doubled and Austria has fallen to the fourteenth place.

In April 2015 Drillisch launched a new portfolio of smartphone tariffs in many of its retails sub-brands.

While in the neighbouring Swedish 4 operator competitive market gigabyte allowances doubled for same prices (40, 50 and 100 gigabyte smartphone plans are now available and on some Swedish networks 30% of the residential smartphone customers are now on the 20, 50 or 100 gigabyte plans) in Denmark two operators started moving in the opposite direction.

Telefonica published (link here) on their public policy blog a review of the Digital Fuel Monitor methodology. Telefonica’s critical review of the Digital Fuel Monitor methodology is based on a review (link here) conducted by a consulting firm called Solchaga Recio & Associates (SR). In this 2-pager research note we respond to Telefonica's criticism. The note also includes the copy of our first reactions posted under the Telefonica blog post.
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Northern Europeans get 50 times more gigabyte allowance on mass affordable tariff plans than consumers in non-competitive EU member states such as Greece

Three UK has now more than doubled the price of its flagship SIM-only smartphone plan. Hutchison appears confident that price increases will not deter the European Commission from approving its planned acquisition of o2 in the UK with an ineffective upfront ‘throughput≠capacity’ based MVNO remedy.

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.

In February 2015 EE increased mobile internet smartphone plan prices by 27%.

In 4 to 3 consolidated markets and in a market where consolidation is on the making the average price of the 5 gigabyte mobile internet access basket rose by up to 56% while the lowest available price rose by up to 68%. In markets that went from 3 to 4 operators and in a 4-player market where consolidation was blocked the average price of the 5 gigabyte mobile internet access basket fell by up to 37% while the lowest available price fell by up to 40%.

Downlad Rewheel's presentation » here

Meanwhile Telefonica, post merger, also raised mobile internet smartphone plan prices by double digit percentage.

In this two-part guest blog for the World Wide Web Foundation, Antonios Drossos of Rewheel discusses the potential threats of price discrimination. Download as PDF: » here

This is the first empirical evidence of the pro-competitive benefits of real net neutrality rules that ban price discrimination (zero-rating) – it leads to lower internet usage prices and higher volume caps!

Unlike all other vertically price discriminated telco mobile TV and film store video services Telenor’s service is not zero-rated but the price is massively discounted. Telenor charges 10 times less per Gigabyte when consumers watch its own internet video service over its mobile network compared to the price it charges consumers for open mobile internet access!

This is the first letter by leading scholars that unequivocally supports a bright-line ban on all forms of paid prioritization (including zero-rating).

"A decision relating to the future of mobile television content"

On the 27th January 2015 ACM, The Netherlands Authority for Consumers and Markets has fined Vodafone for violating the Dutch net neutrality law.

Slovenian regulator has found that zero-rating internet apps is violating the non-discrimination clause of the Slovenian national net neutrality law.

The suggestion by the Presidency of the EU Council to omit from the scope of net neutrality regulation the potentially anti-competitive practice of price discrimination (e.g. zero-rating) and allow instead Member State legislative discretion will balkanise internet access and prevent the creation of a European Digital Single Market.

On closer examination, the bill is so narrowly written that it fails to adequately protect users, innovators, and speakers against blocking, discrimination, and access fees. Citing Digital Fuel Monitor research.

Although the author referred to its work as “analytical” the study made no reference whatsoever to the most important and wide spread economic net neutrality violation – application based price discrimination such as zero-rating.

Net neutrality and why it matters (or not) for the digital economy. Based on Rewheel quotes and Digital Fuel Monitor analysis.

The Commission was well aware at the time it approved the Austrian merger (December 2012) that Hutchison’s Final Commitments (MVNO wholesale access) could not remove the competition concerns entirely.

Will consolidation lead to higher consumer prices for mobile internet access in Denmark as it did in the Austrian and German markets?

Two years after the merger of Hutchison and Orange the European Commission’s presumed “effective” MVNO remedy is finally implemented – and as we predicted it is proven toothless

Analysis of smartphone mobile internet access roaming prices in EU28 in Q4 2014

On the 27th November 2014, last Thursday, on the European Council the representatives of the 28 EU Member States discussed, among other topics, the proposed Europe-wide regulation of net neutrality. The Dutch representative stressed that the regulation should explicitly ban vertical price discrimination of specific internet services, content and applications. Slovenia, Hungary and several other Member States have endorsed the Dutch proposal and asked for the explicit ban of price discrimination in the context of the net neutrality regulation.

Vertical integration of internet access with telcos’ specialized services (e.g. telco TV) and vertical integration of dominant search engines with internet search specialized services (e.g. Google Flights) are both severely restricting consumer choice, foreclose competition and harm the open internet

20th November 2014: this week we saw two notable net neutrality developments in Europe.

Major price movements on both sides of the Atlantic between Q1 and Q4 2014. Smartphone internet usage price rankings, price changes and internet access speeds EU28, OECD, 41 countries, 69 operator groups, 136 operators, 40 operator discount brands and 84 MVNOs.

Telco ‘access’ Specialized Services are no different from Google’s anticompetitive ‘search’ Specialized Services

In this public research note we present the latest net neutrality violations in Hungary, examine the adverse structural impacts that such ‘a la carte’ models pose to mobile internet access and conclude by highlighting the need for erecting a ‘Chinese spectrum wall’ between internet access over licensed mobile spectrum and discriminatory proprietary telco services (‘Specialized Services’).

FCC refocuses the US net neutrality debate on zero-rating over wireless networks while in Europe national telecom regulators and the European Parliament are taking a closer look.

Zero-rated content or apps are applications or services that allow the end-user to consume unlimited Gigabyte volume of selected content without depleting their inclusive open mobile internet volume allowance (source: Wikipedia)

The price of mobile internet in Austria, following the 2013 hike, surged again in Q3 2014. A profound structural change is in the making in the Austrian mobile data access market.

The price of mobile internet went up notably in the UK during the 2H of 2014. The price of mobile internet also went up notably in Austria after the 4 to 3 mobile operator merger. The Austrian competition authority has already opened an investigation.

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.

A flash research note reacting on European Commission's decision granting conditional approval for the Hutchison-Telefonica merger in Ireland.

In America and Europe, the internet is going mobile out of convenience. In the developing world, mobile is the internet. Here's what happens when companies take advantage of that. Citing Digital Fuel Monitor.

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.

This report has been commissioned by Viestintävirasto, the Finnish Communications Regulatory Authority.

Will Almunia succumb to Merkel’s pressure and clear Telefonica/E-Plus merger with toothless Austrian like remedies (leased 2600MHz spectrum, WiFi, MVNOs) or stand firm, enforce the law and prohibit the merger?

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.

One possible reason could be to make their own zero-rated traffic heavy smartphone apps more appealing to the end consumers. We compared the pricing of incremental gigabytes of Vodafone, Deutsche Telekom, Telefonica, Orange and Hutchison across their EU & OECD footprints.

In this flash insight we benchmarked key mobile internet connectivity competitiveness metrics in the United States against EU Member States and other OECD countries. In addition we show Deutsche Telekom (T-mobile) prices and network performance (measured by OpenSignal) in US vs different EU Member States.

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.

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?

The high, in many cases unaffordable, Gigabyte prices commanded by operators in protected markets where challengers are not present are effectively suppressing mobile broadband penetration and most importantly mobile data consumption.

Inefficient operators that cannot make a healthy return on €20 mass market 10 GByte all-you-can-eat minute & SMS smartphone tariffs will soon become telco road kills in Europe’s competitive markets.

Telefonica’s acquisition of E-Plus, if approved, will turn Germany into a fiercely competitive market.

On the 4th of November 2013 Rewheel has submitted its contributions to the public stakeholder consultation launched by the ITRE Committee of the European Parliament on the European Commission's proposal on a telecoms regulation titled 'Connected Continent'.

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.

Contrary to GSMA's and ETNO's unsubstantiated claims echoed by Vice President Neelie Kroes Commissioner for EU's Digital Agenda, European 3G/4G consumers pay 5x less and use more mobile data at faster connections speeds than US consumers.

Mobile internet access represents the fuel of the digital economies, the price of gigabytes is analogue to the price of energy (€/kWh) for traditional industries. Proliferation of all you can eat voice & SMS tariffs exposes non-competitive mobile internet pricing practices.

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.

EU’s single telecom market is threatened by the lack of mobile network infrastructure based competition within the national borders of half of EU’s member states and from the noticeable absence of pan-European retail operators offering borderless European tariffs.

Smartphones represent the vehicles and their tariff plans the fuel of the digitial economy. Our research reveals alarming differences in the absolute price level and affordability of smartphone tariffs across the EU27 member states. Moreover, our analysis shows that in the affected member states high prices are already suppressing mobile internet adoption. The impacts of E5 Group presence are also addressed.

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?

Up until late 2009 E-Plus had been following a low cost challenger strategy primarily targeting customers with no or very light mobile data needs. But late 2009, when it became apparent that fast mobile data is not a niche offering any longer but is becoming an essential need of the mass consumer base in Germany and in other developed telecoms markets, they swiftly declared a new, “voice+data” strategy.

Market saturation, eroding voice ARPU and climbing data capacity upgrade costs are threatening the sustainability of mobile operators’ historically high profitability. We show that by taking timely actions on both the retail and network cost fronts smart operators can sustain their profitability while redefining their business to serve the increasingly data centric life style of their customers.

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.

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.