A Smartphone Financing Campaign in Bangladesh

Bangladeshi operator Robi has launched a smartphone financing campaign called Phone Loan, which enables customers to buy new smartphones on credit. Using the Alternative Credit Scoring (ACS) service, which is powered by blockchain and big data analytics technology, the handset financing campaign mainly targets customers who need loans to purchase handsets.

The Phone Loan campaign offers handset loans to eligible customers who do not have credit cards. Robi plans to identify eligible customers based on their data usage. Eligible customers will be notified through SMS and provided with details related to handset financing, after which they can check their eligibility through the Phone Loan app or the operator’s website. Eligible customers can purchase handsets from Robi’s walk-in-centers, the Phone Loan app and the operator’s website by making a one-time down payment, with the rest of the amount to be paid in equal monthly installments from six to 12 months.

While we do not know the exact terms of Robi’s loans, we find this offer notable for several reasons. Like many developing countries, Bangladesh has a significant subset of the population which has limited or no access to conventional banking and credit. This is exactly the population that has been so well served by mobile money platforms, by which MNOs have been able to forge mutually beneficial relationships with them. In the case of the present offering, Robi is faced with the problem of customers and potential customers who need smartphones in order to partake of the operator’s services but lack the funds to purchase them outright and also lack credit histories.

In order to get devices into the hands of these consumers, Robi has chosen to use Alternative Credit Scoring, a widely accepted protocol for evaluating the risks of lending to those who suffer not from bad credit but from no credit at all, as they have not had the opportunity to establish a credit history. ACS relies on such data as utility bill payments, rent payments and—particularly relevant here—mobile phone bill payment histories. Thus, the operator is in a particularly good position to evaluate the eligibility of its own customers for phone loans.

Getting handsets into as many hands as possible is key to the maximizing of the business of MNOs, and nowhere more so than in developing economies. If lack of credit leads to lack of access to mobile networks and mobile data in particular, operators as well as potential customers will suffer. Therefore, offers such as Phone Loan are win-win. The only issue, apart from the creditworthiness of those who participate, is the financing of the phones. If the interest rates are too high, customers will default, or the program could fail to get off the ground.

Tarifica is a global SaaS company and a market leader in the real-time collection, analysis and delivery of telecom plan and pricing data worldwide. Through a mix of AI, modeling and market expertise, Tarifica tracks hundreds of thousands of plan and pricing data points daily. No other company tracks more. Tarifica's mission is to continuously convert data into the dynamic intelligence that fuels opportunities for its clients, the world's leading operators, regulators and consultants.
Learn more about Tarifica at www.tarifica.com.

Value-Added Mobile Service Revenues to Reach US $120 Billion by 2024

Revenue opportunities for MNOs that do not come from voice, messaging or mobile data termination are set to increase to US $120 billion by 2024, from US $67 billion this year, according to a new research report. The categories of revenue-generating streams that network operators can rely on to offset declining revenues from voice and messaging termination include mobile identity services, carrier billing and cellular IoT connectivity, according to the report, which also encourages MNOs to optimize LTE networks for data services, prepare for future 5G networks and explore new options to better utilize the networks they have in place.

The research forecast that the surge in average data traffic generated per user per day will go from 49 GB in 2019 to over 157 GB by 2024 and that this increase will be one of the main challenges faced by operators. The growth will be driven by increasing use of video streaming services such as Netflix and Hulu, which will account for 56 percent of total mobile data generated by mobile handsets, up from 40 percent in 2019.

The results of this study tally extremely well with what we have been writing in these pages for the past several years. Now is a paradoxical time for mobile operators—on the one hand, revenues from traditional services are in steep decline, but on the other hand, opportunities abound for the creation of new revenue streams from non-traditional or “value-added” services.

The pursuit of non-traditional businesses, and particularly the identification of new opportunities, should be a major priority for all MNOs, especially the larger ones that have the capacity for multi-pronged business development and diversification. The prediction that revenue from non-traditional sources will nearly double in five years is significant and very encouraging in this regard.

Furthermore, the mobile-data usage rate among consumers is predicted to triple in the same five-year period, and that statistic should also suggest a course of action to MNOs—that is, they should be sure in their pursuit of new opportunities not to neglect core functionalities. Maintaining and improving networks is key, even if data is commoditized and direct revenue from usage is declining. If networks are not optimized, then the promise of the new value-added services cannot be fulfilled.

 Tarifica’s products and services are powered by large-scale data from the global telecom industry and a deep level of expertise gained from our singular focus. We leverage these core attributes to help our clients understand their markets and answer their most challenging questions. Our team of analysts, software engineers and data scientists deliver real-time dynamic solutions for the telecom industry. Our software and state of the art data extraction techniques enable our clients to make smart decisions in real-time based on insightful, actionable data. 

We are the telecom plan & pricing experts.

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

EU Residents Slow to Increase Roaming Usage Despite End to Surcharges

Although a large majority of European Union residents are aware that roaming surcharges were abolished on 15 June, a majority of those who traveled within the EU since that date are still restricting their usage in some way, according to a survey by Eurostat. The survey, which was conducted in late August across all 28 EU states, found that 71 percent of people know about the end of roaming charges, and of those who have traveled to another EU country since 15 June, the figure is 86 percent.
 
Thirty-one percent of respondents said they used mobile internet as much abroad as at home since 15 June, compared to 15 percent of those who traveled in the EU before the changes took effect. The number who do not use mobile data abroad fell to 21 percent from 42 percent. More than twice as many also made calls abroad (24 percent versus 11 percent.)
 
However, 60 percent of those who traveled after 15 June said they made an effort to either turn off their phones, turn off data roaming or buy an alternative SIM card or roaming package. Of those who traveled before 15 June, the figure was 66 percent.
 
After all the hoopla attending the debate over roaming charges within the EU and the eventual, long-awaited abolition of such charges, one would imagine that European mobile users would be reveling in their new-found freedom to “roam like at home.” And yet as this survey shows, significantly more than half of travelers are still acting as if there were a reason to avoid using mobile services, especially data. Considering the small physical footprints of most EU states and the frequency with which EU residents cross borders, this is a serious issue.
 
While mobile operators generally opposed the end to roaming charges on the grounds that they were a rich source of revenue, non-utilization of services cannot be good for operators. If the surcharges were in fact keeping subscribers from using services, ending those charges should eventually have a positive effect on revenue.
 
However, it is clear that user behavior has lagged behind changing realities, most likely for no other reason than that old habits die hard. Since this usage pattern represents a shortfall in both revenue and network utilization, it should be addressed aggressively. MNOs should be thinking creatively about how to raise awareness and publicize the advantages of roaming. And if information alone is not enough (and it may not be, given that the vast majority of users say they know that the surcharges have ended), then something more may be necessary. Operators may wish to consider promotions offering incentives to those who keep their data switched on while traveling abroad.
 
Another thing that operators could do, which does fall under the heading of providing information, is to make clear to users that the service caps that are in place under the new regulations are not set at a level that would interfere with ordinary use, especially during short-term travel. Since users are often unaware of their usage levels per unit time, a clear explanation could help in this regard.




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 

Messaging Revenues to Decline to US $112.9 Billion in 2019

The global messaging market will decline to US $112.9 billion in 2019 from US $113.5 billion in 2014,according to a report. However, overall messaging traffic is expected to double by 2019. This trend is being driven by OTT messaging applications such as WhatsApp and Line,which have seen a threefold increase in message traffic to 100 trillion by 2019 globally from almost 31 trillion in 2014.Revenue generated from each OTT message is forecast be less than 1 percent of that generated by SMS and MMS in 2019.  

While the free or low-cost offerings of OTT messaging providers are causing users to switch from SMS and MMS, OTTs are having trouble generating revenue with these services, and SMS and MMS still drive most of the messaging revenue worldwide, even though the sector is shrinking. In particular, MNOs are benefiting from growth in the A2P (application-to person) sector.To date, OTT providers have not been able to derive enough revenue from advertising, and therefore must devise new strategies, such as offering diversified services beyond simple messaging; an example is mobile payments. 

Tarifica is the 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. Click here to contact a Tarifica Analyst.

Redefining a Mobile Service Provider

There is a paradox at the heart of the mobile telecom industry. Despite skyrocketing data use and proliferation of connected devices, the industry is facing a structural crisis that raises serious questions about its sustainability and growth. With mobile penetration rates in almost all markets well above 100 percent, competition among MNOs has grown fiercer and more focused on price reductions. Traditional sources of revenue have been undercut by OTT services such as WhatsApp and Skype. The increase in consumer data usage has been a mixed blessing in that it has placed pressure on operators to make expensive improvements to the capacity and coverage of their networks. Finally, national regulators have become increasingly activist with regard to pricing, M&A activity and service requirements, further increasing costs for providers.

In the face of this paradox—increasingly large amounts of money flowing through the mobile industry while operator revenues grow ever flatter—we expect to see new business models, revenue drivers, pricing strategies and even leading players. Ultimately, the results of these changes could be the redefinition of the term “mobile service provider.” We have already begun to witness the first steps of this process. MNOs have worked to reevaluate their core offerings in order to find new sources of revenue or to reduce churn. The defining trait of 2014 was MNOs’ drive to acquire the infrastructure needed to offer converged packages. Operators around the world—but particularly in the hypercompetitive European markets—pushed to lock in customers and raise monthly spending by offering quad (mobile, fixed voice, broadband and cable television) packages. Further, non-core value-added elements like Spotify, Netflix and other content-driven services became increasingly important in plan construction, forcing operators to branch out into new partnerships and ventures.

A dramatic recent example of this occurred in the U.S. with Verizon’s US $4 billion acquisition of AOL—a play to secure AOL’s mobile ad software, more proprietary content and new revenue streams in an increasingly competitive market. This type of news is an illustration of how the distinction between content creators, information aggregators, device manufacturers and service providers continues to grow blurrier. Just as we expect mobile operators to be packaging more non-traditional features in with their mobile packages, we believe that there is an opportunity for other types of companies to enter the mobile services space and use these services as a way to augment their traditional packages.

With Facebook’s acquisition of WhatsApp and Google’s ever-expanding reach across all realms of digital life—including its recently launched U.S. MVNO running on the Sprint and T-Mobile networks and its discussions with Hutchison Whampoa for international expansion—we would not be surprised to see either of these entities begin to pivot increasingly into mobile service as an add-on to their traditional offers. While projects like Google Loon/Fiber and Facebook Zero made headlines before retreating from the industry consciousness, the economic conditions that initially drove these initiatives remain—giant internet content providers that have significantly higher margins are growing impatient with mobile and broadband providers’ ability to connect their potential customers. Further, MVNOs like FreedomPop are experimenting with new business models like ad-based data sales. Finally, whether through mesh networks, ever-expanding Wi-Fi hotspots or new technology solutions, MNOs’ hegemony over mobile data is likely to be challenged in the coming years. The high and growing demand for large volumes of fast data makes the industry a prime target for disruption if an adequate alternative presents itself.

There are so many variables in play that it is impossible to make a firm prediction as to the precise long-term evolution of the industry. However, this much is certain—for MNOs to be successful in the future they will have to be adaptive and flexible in terms of developing new revenue streams and fending off non-traditional rivals. Maintaining outmoded plan structures and customer acquisition strategies will almost inevitably lead to painful disruptions. The current structural and competitive environment have the potential to change the core MNO business model in a way not seen since the launch of the iPhone in 2007 and the beginning of the mobile-data revolution. As such, strategic choices made by operators in the coming years will have an outsized impact on the future of the industry as a whole.

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. Click here to contact a Tarifica Analyst

Telus Makes Misleading Speed Claims

Following a hearing with the CRTC, Canada’s mobile regulator, on whether new regulations on the sale of wholesale mobile service would stimulate competition, MNO Telus issued a press release arguing against the regulations. The operator stated that Canada’s relatively high prices are merited and ultimately provide consumers with much better value. “Canadians enjoy wireless data speeds that are the second fastest in the world,” the release said, adding that Canada has “three times the average speeds offered in the U.S. and France, and nine times faster than the U.K.”

There was, however, a significant problem with the statistics that Telus cited, which was instantly flagged by Canadian media and industry watchdogs: They are based on the operator’s advertised maximum download speeds and not its real-world performance. As a warning against this type of usage, the OECD report from which Telus’ numbers were pulled stated, “Operators in some countries advertise faster speeds closer to the theoretical maximum which are rarely achieved in real usage.” As an example of how different these numbers can be, Akamai Technologies’ State of the Internet report for Q2 2014 states that Canada’s average download speeds were 7 Mbps compared with 6.1 Mbps in the U.K., not the nine times faster that Telus reported. 

We generally concur with Telus in terms of the broader argument that many of the European regulatory measures aimed at keeping costs down for consumers have inadvertently created a perverse set of incentives for operators in which maintaining current prices takes precedence over building next-generation networks. However, Telus’ tactics in this case have been almost comically poor. Due to MNOs’ large size and bureaucratic culture, many journalists and consumer advocacy groups are inclined to paint them as enemies of the consumer that consistently prefer “profits over people.” By manipulating the data in what appears to be the most translucent manner possible (there are multiple well-known and free sources for average download speed), Telus has validated all the fears of MNO cynics and moved popular opinion in the exact opposite direction to that which it intended. As this debate over competition continues in countries around the world, MNOs and their supporters would be well advised to not overreach in the way Telus just did. 

“Consumers tend to have little ability to evaluate network speeds. Most do not know how many megabits there are in a five-minute video. Instead of just listing theoretical maximum speeds, operators should differentiate their plans by describing speeds in practical and concrete terms, for example: ‘Now you can watch Game of Thrones anywhere; on our LTE network, 70 percent of videos stream with no lag.’ This strategy can help operators upsell consumers to higher-speed data packages and strengthen the brand’s association with reliable and fast data performance.”

Will Watts, Program Manager at Tarifica

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

The Case for Designing Data Plans in Concert with Messaging OTTs

Since coming to popularity, Over-The-Top (OTT) services have proved a serious challenge for mobile network operators (MNOs). These internet-based services ride on top of operators’ networks, and those that offer free or reduced-cost messaging or calling compete directly against operators’ core sources of revenue. OTTs are a threat to the foundation of the traditional MNO business model. This challenge is driven by two factors: First, OTTs have the capacity for rapid, viral growth—services can rise quickly and add users at a pace that changes a market’s fundamental dynamics before MNOs can execute a strategic response. Second, these services tend to significantly reduce operator revenues—the increased data usage from OTT messaging does not even come close to making up for the loss of SMS and voice revenues. It is estimated that, on average, SMS messaging generates 50,000 times more revenue per megabyte than data usage. Given the ever-expanding number of services that OTTs provide and the popularity of these services, the ultimate conclusion of this trend could be the so-called “bit pipe” scenario, in which all industry innovation—and profits from that innovation—move to external players and MNOs are effectively transformed into utility companies that sell mobile data access. In this scenario, data becomes a commodity with ever-decreasing returns, and MNOs are only able to differentiate their services on the basis of network strength, speed and price. Understanding the stakes of this existential threat, MNOs have tried many strategies to mitigate the effects of OTTs, slow their growth or recreate OTT offerings under MNO auspices. All of these strategies have either not achieved the scale needed for replication or have failed outright. Given the magnitude of the challenge facing the industry and the inability of conventional options to address it, it is time for MNOs to embrace a radical solution—moving away from plans structured around  voice and SMS features and partnering with OTTs to build plans that leverage the strengths of both OTTs and operators. Tarifica believes that MNOs should embrace a strategy of partnering with selected OTTs and building targeted plans with them. This approach offers operators three critical benefits:  Marketing Enhancement—MNO/OTT plans provide significant branding advantages to operators by linking mobile services with “trendy” companies and providing operators with the ability to advertise the real-world benefits of these services—such as advertising WhatsApp messaging, Skype video calling or Spotify music streaming—rather than the abstract concept of data, which is often hard for consumers to grasp. New Revenue Stream—While OTTs have excelled at customer acquisition, many have not yet identified how to monetize this huge base of users. Critically, many lack a fluid, in-app solution for selling users premium content. This opportunity pairs well with MNO strengths and needs alike. MNOs can offer partner OTTs direct-to-carrier billing, which would provide users with an instantaneous and seamless means of paying for services. For operators, this would provide a tie-in to a new and expanding source of revenue. Reduction of Tensions With OTTs—By establishing a shared revenue source with OTTs, MNOs will create a direct channel to some of the most dynamic actors in the market and, ultimately, foster a climate of mutuality with these actors in which all have strong incentives to build a future environment where both entities will flourish. MNOs that succeed in this new frontier of mobile offerings will likely operate under several guiding strategic principles as they adjust to this significantly different environment.  First, any new plans created will offer significant revenue upside for operators—whether through decreased churn, increases in existing revenues or new opportunities. Operators that enter this arena halfheartedly without a clear understanding of OTTs and a specific strategy for how to leverage their strengths will be unlikely to have any success. Second, successful operators will create plans that are truly symbiotic and sustainable for themselves as well as for the OTTs involved. Many MNOs will be tempted to push for substantial concessions from partners that will undermine the core of the OTT business model. These plans will be rejected by popular OTTs and leave these MNOs working with inferior partners. Finally, successful operators will act decisively to forge new partnerships and bring these plans to the market. As noted, OTTs excel at identifying market needs and adapting rapidly in order to provide new services. To succeed in this environment, MNOs need to emulate this culture of institutional nimbleness. The success of these kinds of initiatives will depend on capturing fleeting market opportunities, and the most successful MNOs of tomorrow will be those that adapt institutionally and embrace the expectation of rapid change. This article is an excerpt of a presentation given by Tarifica at the Pricing Mobile Data Conference in London. For specific examples of plan types that are well suited for partnering with OTTs, deeper analysis of the current market conditions or further information on any point in this article, please visit: http://bit.ly/1sSgB8D to view the full Tarifica presentation.

More Than 70% of Consumers Use Mobile Phones for Work.

To Contact the Research Team :  Tarifica

Sandvine to Support Smart’s Bite-Sized Data Plan Store

Smart Communications, the leading MNO by market share in the Philippines, has selected Canada-based Sandvine, an intelligent broadband solutions provider, to support its mobile internet store, PowerApp, which offers bite-sized, application-specific mobile data plans.  PowerApp, developed by Smart’s technology partner, Chikka Philippines, offers email, chat, photo and social packages in 15-minute, 3-hour or per-day increments with unlimited access.

Emerging-market operators such as Smart are increasingly adopting application-specific data pricing as a strategy. It offers a versatile means of tailoring plans according to customers’ usage, allows customers to use apps such as Facebook or YouTube without fear of bill shock and gives them a clear understanding of what they are paying for. Apart from benefiting from an incremental revenue stream, operators can also potentially upsell their customers as data usage grows and continually adapt their offerings to market needs. In emerging markets, where many users may not be able to afford a full-scale data plan, allowing them to access the apps most relevant to their needs not only encourages greater data consumption but puts mobile data within reach of a wider population. It also enables operators to attract users to data at an earlier stage of their mobile-use timeline. The success of this pricing strategy is increasingly evident—one example is Zimbabwean MNO Econet Wireless’ introduction of unlimited Whatsapp bundles, which we reported in the 22 May Tarifica Alert. Another is Facebook’s recent acquisition of Finnish startup Pryte, which enables operators to offer bite-sized data plans; the acquisition is aimed at supporting Facebook’s Internet.org initiative in emerging markets.

However, app-specific data pricing can also be relevant to certain segments of developed markets, such as the youth demographic. Since some users may utilize most of their plan allowances on certain apps only, offering an app-specific data plan may allow operators to better meet the needs of these subscribers. Furthermore, operators could offer app-specific plans or even unlimited data plans with short-term validity to coincide with popular events such as the FIFA World Cup. Operators could also price apps such as YouTube that consume a large amount of data at a different rate from apps such as Twitter that use less data. App-specific pricing also creates the possibility of allowing sponsorship of data for specific apps, which would constitute an additional revenue stream for operators. In the U.S., MVNO FreedomPop has already announced plans to launch app-specific and bite-sized data plans as well as sponsored apps in Q3 2014. These plans, currently in test mode, will be offered alongside FreedomPop’s basic service, which provides users with 500 MB of 4G data per month with no associated monthly fee.

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

3 UK to Launch App for Calls, Texts Via Wi-Fi

Mobile operator 3 UK has announced a new app called Three inTouch that allows customers to talk and text over a Wi-Fi connection. The app will be available beginning in early August and will be offered free to all contract, SIM and pay-as-you-go customers. Any minutes or texts used are charged against a customer’s existing monthly allowance or prepaid credit. The Wi-Fi usage is not charged against the customer’s data allowance.

This is an interesting service option. The calls and texts and not carried over IP; rather, a Wi-Fi signal conveys the calls and texts to 3 UK’s cellular network, which then completes the connection. Unlike with a VoIP or other OTT service, the charges are made to the user’s existing voice and text allowances. So it appears that the purpose of Three inTouch is not to compete with OTT providers but to ensure connectivity for 3 UK customers, especially if they are in a place where cellular coverage is poor or nonexistent, as long as a Wi-Fi connection is available.

 According to the operator, once the app is installed, the transition from standard service to Wi-Fi-assisted service is intended to be seamless.

Also in the U.K., operator EE has announced trials of a Wi-Fi voice service that is intended to create a “zero-defect” calling experience in the country’s busiest regions and get rid of “whitespots,” or no-service areas. In the U.S., T-Mobile currently has a similar service in which calls can be placed over a Wi-Fi connection and are charged based on monthly plan minutes.

“Using Wi-Fi to fill in low- or no-coverage “whitespots” makes sense in a country like the U.K., where free public Wi-Fi is available in many areas. In other markets, it is an open question whether operators would do better to invest in expanding and strengthening their cellular networks or in promoting the proliferation of Wi-Fi. In truth, while apps such as Three inTouch can offer some advantage to users, they are, in the long run, no substitute for reliable, gap-free mobile networks. “

John Dorfman,

Editor-in-Chief,

The Tarifica Alert

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  

Costa Rican Regulator Proposes Changes to Data Pricing

Costa Rican regulator Superintendencia de Telecomunicaciones (Sutel) has decided to hold a public consultation on the subject of the possible introduction of a flat rate for mobile internet services for postpaid consumers, based on the amount of data used. The scheduled date for the consultation is 1 July 2014, and Sutel will have one month to respond to the issues raised, after which it will make a decision on the proposed tariff plan. The scheme would involve users being charged a rate of CRC 0.0075 (US $0.0001) per KB regardless of transmission speed. Operators will also be obliged to offer a basic plan for CRC 3,750.00 (US $6.61) that would offer a data allowance of 500 MB, with the proposed data billing rate applying for excess usage. This method of pricing for data use has only been applied to the prepaid sector so far and was implemented by carriers as recently as mid-2013.

Since the liberalization of the telecom market in late 2011, Costa Rica has seen substantial growth in terms of subscriber numbers and competition. In a country where fixed broadband penetration is only around 10 percent, mobile devices are the primary source of internet access. A recent report from Sutel indicated that as of the end of June 2013, nearly 88 percent of Costa Rica’s 3.99 million internet users were mobile broadband subscribers. The number of mobile internet users grew by 86 percent from Q1 2012 to Q2 2013. In fact, with the increasing adoption of smartphones, data usage has also risen considerably. Now operators ICE, Claro and Movistar are faced with the same dilemma as other global operators—that of providing and maintaining quality of service while dealing with an increasingly congested network. ICE introduced a throttling threshold of 6 GB on its Kolbi 3G and 4G unlimited postpaid plans earlier in the year.

Operators in other markets around the world have found that an unlimited model is not sustainable in the medium to long term, especially if the operator has 4G. Many operators have used a 4G launch as an opportunity to move to a tiered data pricing structure. While such a model allows users to choose a plan that meets their needs, it also gives the operator the opportunity to upsell users who regularly exceed their data allowances. Many Costa Rican consumers have voiced concerns over this proposal because they are used to relying on unlimited mobile internet. However, if operators offer appropriately structured tiered plans, the average user may benefit from improved services and better cost control.

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

Airtel to Extend Movirtu Service Across all African Operations

Global telecommunications group Bharti Airtel has signed an agreement with London-based Movirtu, a provider of virtual SIM solutions, in which Airtel will offer the Movirtu Share service through its 17 subsidiaries across Africa. The operator launched this service as a test in Madagascar in 2011. The first commercial deployment under the new agreement has already taken place in the Democratic Republic of Congo (DRC), and two more deployments are underway.  Movirtu’s patented virtual SIM platform allows mobile operators to provide services to users who rely on borrowed handsets because they cannot afford to purchase them. It also allows users to maintain multiple numbers on the same handset.

Access to mobile services can serve as a harbinger of economic progress for the many millions living in emerging markets where mobile phones are more than just a means of communication. While mobile operators have achieved considerable penetration in Africa, there still remains a vast and untapped market consisting of those who are too poor to own a handset or maintain services, despite the growing availability of lower-cost options. The World Bank estimates that there were 2.4 billion people in the world living on less than US $2.00 per day as of 2010. The 1 billion who live on US $1.00 to US $2.00 per day represent the market being targeted by Movirtu and Airtel. While providing mobile services to this latent market could have significant socioeconomic implications, for the operator it represents a sizable revenue opportunity. With virtual SIMs, it may be able to lock in customers at a nascent stage and later sell them more services as they progress economically and in terms of mobile usage. Also, since the cost of providing a virtual SIM is around US $0.20 as against US $14.00 to US $21.00 for a traditional SIM, the margins can be attractive. In Madagascar, Airtel launched this service under the name ‘Antso Majika’ through its Village Phone Project in conjunction with the International Finance Corporation. According to Airtel, the entire project (which included various services in addition to virtual SIMs) yielded an ARPU of US $12.00 versus the handset ARPU of US $3.00, due to the fact that the operator was able to tap into a previously unexploited market.

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

U.K. Prime Minister Unhappy With Mobile Coverage

U.K. Prime Minister David Cameron has recently instructed his cabinet ministers to find ways to improve mobile coverage in the country’s rural areas. This directive follows a meeting that was held between the chief executives of the U.K.’s mobile operators and the country’s former culture secretary, Maria Miller, in Q1 2014 to start planning for an increase in rural mobile coverage. The new culture secretary, Sajid Javid, will take on the project and meet with MNO executives for a progress update. The operators were asked to explore, in particular, the costs of adding coverage to the A and B roads in the villages of Shropshire, Dorset and Norfolk. As part of these discussions, the U.K. government has asked that the prospect of national roaming be considered—an idea that the operators are resisting. They argue that revenues lost through national roaming could prevent them from investing in their own networks and infrastructure and that a better way to help increase coverage would be to decrease the amount of bureaucracy and cost involved in erecting masts (towers) in rural areas.

Over the last few years, the U. K. government has launched several initiatives to help bring increased mobile and broadband coverage to areas of the country where there is minimal coverage or none at all—known as “notspots.” Among these initiatives are the mobile infrastructure project (MIP) and Broadband Delivery UK (BDUK). However, both of these programs have received criticism. For example, BDUK has been accused of mismanaging funds, operating in an inefficient manner and favoring BT over the country’s other operators. This new order from the Prime Minister is separate from the previous endeavors, and although the country’s four largest MNOS are all increasing their investments in 4G services, the operators fear that the reasons behind the regulation have a number of different bases—the areas in which the government has asked for increased coverage are core Conservative Party voting territories.

 

“Although the U.K. communications regulator Ofcom must act within the powers and duties set for it by Parliament, and its principal duty is to further the interests of citizens and consumers—which include increased coverage in underserved areas—regulators also need to try to work with operators. Any undue pressure—possibly politically driven in this case—on the regulator to implement changes under the guise of increasing service in the telecom industry may be met with resistance by the operators.”

Kamely Hayes,

Managing Editor,

The Tarifica Alert

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