MNO’s Report: Irish Smartphone Data Use Rose in EU

A report from Irish mobile operator Three shows that 37 percent of smartphone users in the country are using more mobile data while traveling in the EU, one year after the EU introduced new “roam like home” rules abolishing most roaming surcharges.

The report also states that among Irish smartphone users, Facebook remains the most popular app. Sixty-seven percent of these users says they believe the devices help them communicate more with friends and family, and 51 percent believe they make people safer. The report shows that 71 percent of respondents trust mobile security for banking and bill payment apps, and 55 percent value the use of smartphones to make cashless payments.

Back when the EC was debating the issue of roaming surcharges amid widespread user dissatisfaction, operators were expressing serious concerns about the impact of a rule change on their bottom line. If surcharges were abolished, connectivity revenue would go down, they argued, because operators would be paying termination fees while charging lesser amounts for service.

While the logic of that argument is clear, it ignores the potential positive effect of increased data usage on the equation, in that event that “roam like home” actually stimulated it to a sufficient degree.

If a substantial percentage (well over one third) of Irish smartphone users are consuming more data while roaming in the EU as against last year, that is a good indicator that at least in this market, roam like home has brought about a significant uptick in data use. And while we do not know Three’s exact revenue and cost amounts, it is likely that in terms of a trend, the end of EU roaming surcharges will eventually be a net positive for the operator, as for many others in the EU.

The other findings of the report—about the prominence of Facebook and the widespread customer endorsement of mobile banking and payment services—confirm what is already well known among operators, but as far as the roaming data use finding is concerned, we believe that it points toward a future in which operators in all markets embrace cellular “open borders” and capitalize on the ever-increasing interest of travelers in accessing high-speed data wherever they may be, and in large quantities. And in areas where surcharges still exist, offering generous roaming-data packages is a very good way to go, for the present time.

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance.  

To learn more about Tarifica, please visit www.tarifica.com 

European Parliament Passes Net Neutrality, End to Roaming

The European Parliament has approved the Telecom Single Market legislation, opening the way to ending roaming charges starting in mid-2017 and protection for net neutrality across the EU. The member states approved the text without any amendments to the legislation approved by the EU Council, allowing the bill to become law after its publication in the coming days. Under the new law, mobile operators will no longer be able to charge users extra for calls, texts or data when they are roaming in the EU and European Economic Area (EEA) countries starting 15 June 2017. The concept of “roam like home” will be introduced gradually starting 30 April 2016, when customers will pay the same as for national communications when roaming, plus a small surcharge. The surcharge will be capped at 5 cents per minute for calls, 2 cents per SMS and 5 cents per MB of data. The cap on charges for incoming calls will be determined later this year and is expected to be considerably lower than for outgoing calls. The new law also sets a common standard for net neutrality throughout the EU. Internet providers will be required to treat all traffic equally, with no blocking or slowing of any content, applications or services from selected senders or to selected receivers. The only exceptions allowed are compliance with court orders and laws, preventing network congestion and combating cyber-attacks. Operators may still offer “specialized” services, such as guaranteed speeds or quality for specific customers like businesses, as long as this does not affect the overall internet quality for all users on the network. It appears that after several false starts and over-optimistic promises, roaming will really, finally come to an end in the EU. Not surprisingly, it embodies numerous compromises that reduced the original ambitions of the anti-roaming advocates, but nonetheless the Telecom Single Market legislation represents a real sea change in the way mobile service is charged for across borders. We feel that the EU’s decision, essentially taken in response to massive public dissatisfaction with the concept of roaming charges, presages similar changes in other regions across the world. In emerging and less-prosperous markets, at the present time, operators in general can ill afford to change the structure of termination fees, but we believe that in time, as these markets develop, it will become more feasible. And with market development will come greater impatience on the part of consumers at having to pay roaming charges. In some ways, the EU Council’s agreement can be seen as a victory for operators. The original proposal in April 2014 had called for an end to roaming in December 2015 and much stricter net neutrality rules. Pressure from operators scuttled that effort and led to another year of negotiations before the current formulation was approved. As far as net neutrality is concerned, the operators’ association ETNO issued a statement after the vote, saying it supports of uniform rules across the EU rather than a patchwork of national regulations, as has been the case with net neutrality to date. However, it said that enforcement was necessary for the legislation to be successful. In particular, the operators are concerned about the extent to which it will be possible to develop new, differentiated services, such as connected driving, e-health and innovative content distribution models, while abiding by the net neutrality rules.

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance. To learn more about Tarifica, please visit www.tarifica.com

Hutchison Whampoa Faces Uphill Battle in O2 Deal

After talks that began in January, Hutchison Whampoa on Tuesday announced its agreement to acquire U.K. operator O2, which is owned by Spain-based Telefónica for a total of £10.25 billion (US $15.2 billion). However, significant challenges from European Commission regulators lie ahead for the two companies. One key concern for competition authorities, of course, is the fact that a merger of Hutchison’s 3 UK with O2 would reduce the number of mobile network operators in the U.K. from four to three. Beyond that, the EC will have to consider whether the deal should be scrutinized only within the context of the U.K. market or within that of the EU market as a whole.

Any deal involving a reduction in competition in a given market is likely to face regulatory hurdles; this one is likely to face even higher ones than usual, or at least greater uncertainty. The question of jurisdiction is one reason. Since both Hutchison and Telefónica are multinational companies with operations in many European countries, major changes to their U.K. businesses will have ripple effects elsewhere, as well. The change in the composition of the EC within the past year is another “wild card” in assessing the deal’s chances. While similar mergers in Germany and Ireland were approved in 2014, the makeup of the Commission has changed since then. Additionally, those deals were green-lighted on condition that the operators in question open up spectrum for more MVNOs—a policy that would not constitute a remedy in the case of the U.K. market, in which there are already many MVNOs. And finally, the merger will have to be considered in light of another proposed merger in the U.K. announced within the last few weeks—BT’s agreement to purchase EE from Deutsche Telekom and Orange for £12.5 billion (US $18.6 billion). Unlike the 3–O2 deal, this one would not reduce the number of MNOs in the U.K., since it involves a fixed and broadband provider acquiring a mobile business to create converged services.

The above item appeared in recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues or to speak with the research team: http://www.tarifica.com/contactus.aspx

Denmark’s TDC to Launch Unlimited Business Calls in Europe

Danish operator TDC has announced that beginning in October, its new mobile offerings will enable employees of small and medium-sized businesses to make unlimited calls while roaming in any of the Nordic countries as well as in all countries in the EU. The plans also include unlimited SMS. Business customers that purchase TDC’s higher-end plans will also be able to call international numbers at no cost.

According to the economic survey presented in August by Denmark’s minister of economic affairs and the interior, Margrethe Vestager, Denmark’s economy is moving in a positive direction, though there may be fluctuations along the way as the country bounces back from the economic crisis of 2008. However, even in this improving environment, it appears that customers are very budget-conscious, causing the country’s operators concerns about generating revenue as they devise plans to attract new customers and retain existing subscribers, particularly in the business sector.

TDC’s new offers seem like a good way to accomplish these goals and to compete with services from OTT providers, which business travelers are also using when roaming. We are not surprised that Telia, the country’s third-largest mobile operator, has also just announced new plans with unlimited calls and SMS for business subscribers traveling in the EU, Nordic countries and Baltic countries. The two operators appear to have similar offerings, so most likely this is an attempt by both to keep their heads above water in Denmark’s current economic climate rather than an indication of one player making aggressive moves to shake up the market substantially.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx

TIM Italia Introduces Data Package for Students

Italian mobile operator TIM has begun offering the TIM College Pack, targeted at middle school and high school students. The package includes the Huawei Mediapad Link+ 10” tablet with 3G connectivity, 2 GB of mobile data, a 12-month-long language course (choice of English, French, Spanish or German), dictionaries of Italian and English, 20 preloaded educational e-books (Italian literature classics) three manuals for music, drawing and memory tricks from the website Scuolabook.it and a €150.00 (US $200.46) voucher for the purchase of digital textbooks from the same website. The tablet will also come preloaded with Oilproject, an e-learning platform that provides online video courses on various subjects. The operator is also offering the online security service TIMProtect free of charge for the first month. This offer is available until 30 September 2014.

 

The Italian government has been making efforts to integrate digital learning into schools. TIM’s parent company and fixed line incumbent Telecom Italia signed a memorandum of understanding with the Ministry of Education, Universities and Research for measures to support the digital school plan. However, while these measures are being implemented, Italy still lags behind several EU countries in terms of the incorporation of digital learning. Therefore, a service that enables e-learning is likely to be well received.

TIM’s first offering targeted at students’ needs is well-structured. The cost of the plan is €20.00 (US $26.73) per month, except for Telecom Italia landline customers, who instead pay €10.00 (US $13.36) per month. The contract term is 30 months, and a once-off activation fee of €49.00 (US $65.48) applies. Therefore, the total cost to Telecom Italia customers is €349.00 (US $466.41), while for others it is €649.00 (US $867.33). The tablet is currently available for €269.90 (US $360.70) without a plan from the same operator. Furthermore, the content provided is from popular e-learning sources and is relevant for students. There is also sufficient time to activate the content (the last date is 30 June 2015). The fact that no excess usage fees apply to this plan (speed is throttled to 32 Kbps after the data allowance is reached) is another advantage for parents looking for cost control. Finally, the free trial of the TIMProtect service is a benefit that may be attractive to consumers. After the first month, it is being offered at the rate of €2.90 (US $3.87) per month for the duration of the contract. All in all, TIM’s College Pack seems to meet the needs of the target customer segment.

 The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx

EU Confirms Roaming Rate Cuts Starting in July

The European Commission has confirmed its new cuts in mobile roaming rates, which will take effect starting 1 July 2014. The cost of making a call when traveling in the EU drops 21 percent to €0.19 (US $0.26) per minute; the cost of receiving a call falls by 28.5 percent to €0.05 (US $0.06) per minute; SMS costs decrease 25 percent to €0.06 (US $0.08) per text and data services fall by 55.5 percent to €0.20 (US $0.27) per MB. (All prices exclude VAT.) The rates are now down 80 to 90 percent from when the EU first started regulating prices in 2007. Proposed legislation would see roaming surcharges eliminated entirely beginning next year; operators would be required to charge the same prices as they do in their home markets.

The size of these cuts shows that the EU is serious about dialing down roaming within its borders. The rate reduction for data use, at 55.5 percent, is particularly significant, not only for the generosity of the amount but because of the increasing importance of data services for those traveling abroad. The falling rates may have the effect of increasing subscribers’ use of roaming services and thereby offset mobile operators’ losses to some extent. However, the writing on the wall could not be clearer: Now is the time for MNOs to find replacements for a revenue stream that will almost certainly run dry in the near future.

The above item appeared in a recent issue of Tarifica's "The Story of The Week", a weekly report that analyzes two noteworthy developments in the telecoms industry from around the world. For past issues or to learn more about The Story of The Week :  http://www.tarifica.com/storyoftheweek.aspx  

Swisscom Integrates iO App with Vivo Packages

Swiss telecommunications provider Swisscom launched two new offerings for fixed line customers on 19 May 2014. These customers can receive calls anywhere in the world on their tablets via their existing fixed line number, at no extra charge. This is enabled by the new iO@home feature in the operator’s iO communications app. Furthermore, customers subscribing to a Vivo package can make unlimited calls to any Swiss network using their fixed line number and an internet connection whether they are calling from within Switzerland or abroad. These new services are currently available for iPad users only. Customers subscribing to a Vivo M, L or XL package can also choose a TV offering with fewer channels and without the time-delayed viewing feature for a CHF 15.00 (US $16.75) reduction in the monthly tariff.

The EU directive that will eliminate roaming charges from 15 December 2015 does not apply to Switzerland, as it is a non-EU state. However, a sizable segment of its population frequently travels or lives abroad, making both international calling and roaming key features for this market. Swisscom launched its free iO app in June 2013 as its answer to the competition from OTT services which would affect both the international calling and roaming segments. A key feature used to promote this app is that all data is encrypted and stored on secure Swiss servers. As of February 2014, more than 600,000 users had signed up for the app, including a significant number of customers from rival Swiss networks. Since its launch, Swisscom has used the app as another medium by which to extend the benefits of its packages to its subscribers. For example, subscribers to the Natel Infinity XL mobile plan, which offers unlimited calls to numbers in Switzerland, the EU, the U.S. and Canada, can also use the app to make similar calls free of charge, whereas for other customers, the international calling feature using the app is a flat-rate add-on.

Now Swisscom is integrating this app with its Vivo packages, which bundle fixed telephony with Swisscom TV 2.0 and high-speed broadband at monthly fees ranging from CHF 69.00 (US $77.05) to CHF 169.00 (US $188.71). By combining any Vivo package (except Vivo Casa) with any Natel Infinity mobile subscription, users can get a discount ranging from CHF 5.00 (US $5.58) to CHF 25.00 (US $27.92).  Thus through bundling of services and the app offering, Swisscom is not only addressing the competition from OTT services but it is also protecting its fixed line revenues. Furthermore, the promotion of the app for roaming calls in conjunction with competitive data travel packs for its Natel subscribers may increase data revenues, as well.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx

Spanish Consumers Unite to Lower Rates for Mobile Services

Spain’s Organization of Consumers and Users (OCU) has set in motion a collective purchasing initiative by encouraging consumers to unite in order to negotiate lower rates for mobile services. Consumers can sign up for the auction, to be held on 22 May, through a website set up for the purpose. Consumers will have to provide details of their usage of voice and data services, which will then be used to create 25 profiles for operators to bid on. The consumers will be grouped into two profiles—high-usage and low-usage—and the best average rates for the high and low profiles will be calculated to determine the winning operators. Following the auction, consumers will receive the winning offer that best suits their profile and will have the option to accept the offer or keep their existing plans. The contracts will be for one year, and consumers will have the option to terminate their contracts with no penalty before the year is over. The offers will only be for standard mobile services and will not include roaming, international or premium services. Fixed line services (voice or broadband) will not be included.

Spain, one of the largest mobile markets in Europe, has recently been experiencing massive changes in retail offerings due to the extensive impact of the economic recession. With one in four people unemployed in 2013, Spanish consumers in record numbers preferred to give up their mobile phones or switch to cheaper options offered by smaller players such as Yoigo and Simyo. These players made game-changing moves such as offering unlocked smartphones, while others such as MVNOs Ono and Jazztel introduced converged offers which made the most of customers’ desire to save. Prompted by the aggressive moves of their smaller rivals as well as pressure on their own margins, Movistar, Vodafone and Orange eliminated subsidies on handsets while introducing installment plans for new smartphones and buy-back options for old phones. Orange and Movistar even offer unlocked smartphones. Prices also declined; for example, the average monthly bill for mobile services in Q3 2013 was 10 percent lower than in Q3 2012. Despite these moves, according to a study, 19 percent of Spanish mobile subscribers claimed to be dissatisfied with their mobile service.

Spain, to a large extent, exemplifies the situation in Europe. Incumbents, who invested heavily in acquiring spectrum and rolling out 4G networks, have had their ambitions to charge more for 4G services frustrated due to offers of free 4G services from smaller rivals. Consumers’ reluctance to spend on mobile services has also led to measures to prevent bill shock, such as data caps and alerts, as well as the forthcoming elimination of roaming charges in the EU and in some cases the elimination of two-year contracts. Some of these moves have been initiated by regulators, others by operators.

The OCU’s move to hold an auction to source lower mobile tariffs can be understood in terms of this trend. The question is, how successful will it be? In 2013, the OCU held a similar process to procure lower electricity tariffs for retail consumers. It signed up nearly 500,000 consumers, but only got one energy company, a small player called Holaluz.com, to submit a bid. The auction finally led to savings of €49.00 (US $67.84) per year for the 28,000 consumers who chose to sign up for the winning bid. In the case of mobile services, the OCU hopes to attract 150,000 consumers (it had 48,893 signups at the time of writing). While larger players may be reluctant to participate, the auction may attract participation from the smaller MVNOs that can take advantage of the opportunity to sign up a large number of customers at relatively low cost. So while this auction may not be a game changer, it may be one more step toward an even more competitive market in Spain.


The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues:  http://www.tarifica.com/TarificaAlert.aspx