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Strategy Analytics Webinar:Keeping Pace with Mobile Broadband
Pricing Innovations and Trends
12 October 2011
Josie Sephton, Senior Consultant, [email protected]
Susan Welsh de Grimaldo, Director,
Mobile Broadband Opportunities (MBO)
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Agenda
Introduction Tracking Tariffs: Teligen Tariff Benchmarking, Comparing Pricing
The Trends in Tariffs:
Tiered Plans and Managing Data Caps
SIM-Only Plans for Mobile Broadband Modems/PCs
Emerging LTE Pricing Models
Driving Tablet Connections with Multi-Device Shared Data
Plans
Social Networking and other Content Specific Plans, Time-
Based Plans
Conclusions
Questions & Answers2
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Help Me Develop
Strategy Analytics Overview 3
Strategy Analytics: Working with
Global Leaders to Address Your Needs
Help Me Understand
Help Me Analyze
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4
Mobile Broadband Opportunities
A Strategic Advisory Service
Mobile Broadband Opportunities (MBO)analyzes how to grow a profitable mobile
broadband business
Pricing and Go-to-Market
Best practices,innovations inpricing mobile
broadband
Data plans to driveuptake of newdevices, upgradesto 3G and 4G
Managing DataTraffic
Mapping theecosystem ofsolutions
Best in classsolutions, vendoroverview, casestudies
Driving toProfitability
Moving frombandwidthmanagement to
monetization ofdata traffic
Delivering profitablemobile video
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An introduction to Teligen
Pricing and
benchmarking
division of Strategy
Analytics
Providing a range ofdatabase and
benchmarking
systems, plus
customised tools and
consultancy services
Established track
record with
regulatory bodies
and service providers
around the worldAccess to extensivedatabases of pricing
information
Benchmarked output using
internationally recognised
methodologies
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Mobile Broadband Price Benchmarking
Spreadsheet-based system covering mobile broadband pricing for
PCs and tablets, updated quarterly
Includes information from 113 network providers in 33 countries
Tariff information include details on fixed and variable charges,
and the application of allowances and price ceilings
Price benchmarking capabilities with usage baskets, taking into
account usage ceilings where imposed Ability to create customised baskets
VAT on/off and currency selection options
Compare end user costs between different offers, including the
differences in allowances and overage traffic prices
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Tracking Tariffs
Teligen Tariff
Benchmarking
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A Rapid Evolution of Mobile Broadband
Plans for PCs, Modems, Tablets (1)
8
Currently cover over 2600
plans from 113 providers
globally Average 23 plans per provider
Number of offerings
increased by 10% since June
Plans continually changing,evolving
20-30% per quarter
Some very clear trends evident
Source: Mobile Broadband Price Benchmarking September 2011, Teligen
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Simple plans - tieredpricing, some
unlimited
Plans with
PCs
Plans withTablets
Plans with SIMonly, Plans withWiFi hotspots
Bundled services(voice, multi-SIM)
9
A Rapid Evolution of Mobile Broadband
Plans for PCs, Modems, Tablets (2)
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Mobile Broadband
Plans for PCs, Modems, Tablets
Cross country comparison (low usage)
Based on low usage basket
of 300 MB/2 hours usage
per month
Shows monthly cost user
would pay based on usage
specified
Results presented in USD,
PPP, to allow for fairer
cross-country comparison
Lower usage baskets
attract more volume-basedusage charges
10
USD PPP/month, inc VAT
Source: Mobile Broadband Price Benchmarking September 2011, Teligen
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Mobile Broadband
Plans for PCs, Modems, Tablets
Cross country comparison (high usage)
11
USD PPP/month, inc VAT
Source: Mobile Broadband Price Benchmarking September 2011, Teligen
Based on high usage basket
of GB/30 hours usage per
month
Shows monthly cost user
would pay based on usage
specified Results presented in USD,
PPP, to allow for fairer
cross-country comparison
For higher usage baskets,
much flatter pricing,
though not exclusive, ismore evident
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The difference volume makes
12
USD PPP/month, inc VAT
Source: Mobile Broadband Price Benchmarking September 2011, Teligen
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In-countrynot always an even playing field
13Source: Mobile Broadband Price Benchmarking September 2011, Teligen
Basket: 1 GB/5 hours, 15 days per month
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Tiered Pricing forMobile Data
M bil B db d E l i
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Mobile Broadband Evolution:
Shift from Unlimited Data to Tiered Plans,
New Pricing To Drive Subscriptions on Tablets, New Devices
Unlimited data plans forsmartphones and
modems
Heavy modem use
Limited view of types oftraffic on networks
Data Caps and Price Tiersimplemented as data traffic
growth impacts networkperformance
OTT on smartphones,tethering
Policy control to limit abuse,throttle when caps reached
Targeted segments
Video traffic challenge
Multi-SIM plans toshare data allocation on
multiple devicesShared Family Data
plans likely (US)
15
2010-mid-20112009 Mid 2011-12
Strategy Analytics, 2011
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Tiered Data Plans with Usage Caps:
Incremental Overage Charges Out, Messages to User In
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%
If you have/had a data plan with a usage limit, which options appeal to you for when you reach
your data limit? (select all that apply)
Only want unlimited data
Throttle speed
Buy a bucket of MB or GB
Pay per KB or MB
Receive a message before
limit reached
Strategy Analytics
Source: Strategy Analytics Smartphone Owners Survey, US
Results, Jan 2011
Many operators who moved to data caps on tiered plans are communicating on-device
with the user and moved from incremental per KB pricing to throttling or refill buckets,
trends that line up well with consumer preferences
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Tiered Data Plans are the Norm
but what happens at the cap threshold?
Virtually all mobilebroadband plans
come with limits -
even unlimited
ones.
Overage charges andthrottling are by far
most common
approaches used
Typical overage
charge is measure
per Mbyte Higher volume plans
more likely to have
bigger overage units
17Source: Mobile Broadband Price Benchmarking September 2011, Teligen
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Examples of approaches post data threshold
18
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What happens after data allowance?
Graphic presentation showing what
happens to end user costs once
allowance used up
19
Belgium, Proximus
Data allowance is 1GB
After 1GB, overage charges are applied,
and, for this plan, costs rise steeply
Chile, Claro
Data allowance is 0.7GB
After 0.7GB, service stops unless plan is
refreshedSource: Mobile Broadband Price Benchmarking September 2011, Teligen
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WiFi Hotspot Access Bundled in Data Plans to
Supplement Mobile Data Caps, Offload Traffic
WiFi hotspots for mobile broadband plans are increasingly being introducedinto packages
Present in around 16% of packages covered
Used by providers in Denmark, France, Ireland, Norway, Poland, UK, US and others
Provide useful traffic offload for operators
and support external marketing efforts, as are a benefit to users
Coverage issues
Data volumes
20Source: Mobile Broadband Price Benchmarking September 2011, Teligen
Note: Prices shown in local currency
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SIM-Only Pricing for MobileBroadband Modems/PCs
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The growth of SIM-only
Predominant trend this quarter 497 SIM only offers across 2631 plans almost 20%
Some providers, countries more disposed to SIM-only Optus, Australia: 62 out of 134 packages SIM-only
45 package prepaid. 13 SIM-only business specific packages also included Vodafone, Australia: 26 out of 48 packages SIM-only
Orange, Poland: 21 out of 82 packages
While others, arent AT&T, US: 3 out of 21 SIM-only
Verizon, US: 4 out of 27 SIM-only
Plans not restricted to consumers E.g. Optus BYO business plans, 28.8 Mb/s download, 2-16 GB data allowance,
A$25-85/month
Numbers alone dont reveal underlying dynamics 22
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Poland: a case study
SIM-only plans are growing rapidly All 4 operators recently introduced SIM-only, or have greatly expanded range of offers
E.g. Orange, Poland had 8 SIM-only plans in June 2011. It now has 21
Key features Month-to-month billing Some plans are cheaper per month than device-based plans, or offer higher monthly
allowances
Allow users to easily change plan and/or operator, based on needs and available prices
High cost of equipment in Poland likely deterrent to plan sign-up
And low cost in neighbouring Germany encourage people to import kit independent ofoperator
SIM-only plans key in getting user buying and using bandwidth from
operators And all providers need to be on the same page
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LTE Retail Market and PricingApproaches
Examples from
Commercially Deployed
LTE Networks
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The emergence of 4G
Plans predominantly in the US But other countries rapidly rolling out offers
Austria, Denmark, Estonia, Japan, Norway, Poland, Sweden all
offer a range of 4G broadband plans
25
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Examples of Pricing for 4G LTE Data
Services on Modems
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Offers LTE modem FlexPlan - starts user at entry level and
automatically bumps them to next tier when data cap reached Unlimited social networking to 7 sites
Promotion of two free months of service
RogersWireless
Special introductory offer for heavy modem users: the maximum
monthly charge for unlimited data using Xi Data Plan Ninen will be
4,935 yen (including tax) through April 2012
NTT DoCoMo
Overage fees same as 3G: KRW 0.025 per packet (KRW 51.2 per MB) Two initial LTE Modem plans:
LTE Modem 35 (KRW 35,000 per month, 5GB data limit)
LTE Modem 49 (KRW 49,000 per month, 9GB data limit)
SK Telecom
LTE Modem service on its premium brand 1O1O:
HK $249/1GB, 349/5B (with HK$99/GB overage), HK$459/unlimited
Two LTE speed tiers on its one2free value brand:
HK$187/1GB, $287/5 GB ($99/GB overage), $387/unlimited on the
full speed Extreme plan
HK$87/ 1GB, $187/5GB, $287/unlimited on Excite plan with speed
cap at 7 Mbps down
CSL
Hong Kong
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Telia SwedenSets LTE Prices at 2x 3G, Offers Speed Tiers By Data Level
Telia Sweden offers tiered plans for LTE with different levels of speed
promises combined with increasing buckets of data. Basic plan focuses on faster surfing (the entry level mobile broadband plans are 3G) and
includes free WiFi hotspot use
Mid-level LTE plan focuses on large file downloads and video streaming (comparable
Intermediate 3G plan is marketed for movies and music)
Premium plan is billed as the best mobile broadband in the world
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LTE Basic LTE Mid-Level LTE Premium
Intermediate 4G: 319/kr
Surf twice as fastwith 4G.
Surfing for 10 GB / month
5-10 Mbit / s speed promise.
Large 4G: 319/kr
Download large files and watch alot of TV over the Web.
Surfing for 20 GB / month
10-20 Mbit / s speed promises
Total 4G: 499/kr
For those who only settle for the bestmobile broadband in the world.
Surfing for 30 GB / month
10-80 Mbit / s speed promises.
(Source: Telia.se website 8 July 2011)
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MetroPCSNew Use Case for 4G Streaming Video/Audio on Handsets
MetroPCS (US) LTE Handset Plans - Video On Demand as Premium Play MetroPCS leapfrogged from 2.5G to 4G LTE, using 5 MHz, focusing on handsets only (no
USB modems)
January 2011, MetroPCS announced entry tier plan with unlimited MetroWEB but
limited streaming to YouTube; mid-tier added navigation plus streaming over WiFi ;
premium plan included unlimited data & streaming/downloads plus premium content
Early July 2011 plans shifted away from mentioning specific access to YouTube to
include unlimited MetroWEB browsing but capped streaming and downloads on entry
and mid-level plans
28
Plan Included Multimedia
Streaming andDownloads
Unlimited
MetroWEB
Navigation Video on
Demand
$40 100 MB
$50 1 GB
$60 Unlimited
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Multi-Device Plans
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Multi-Device Plans: Operators Aim to Drive Tablet,
Modem Uptake with Bundled Plans
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Bundle Fixed Broadband with Mobile Broadbandfor a discount (Czech O2, Telekom Austria)
Use a smartphone, tablet or portable WiFi hotspotto tether other devices with WiFi; 3G or 4G worksas connection to network
Bundle or Tether
Discount/add on a tablet or modem for existingmobile customers (Orange, T-Mobile UK forbusiness)
Get a SIM-Only at discount price to add modem ortablet to existing mobile broadband plan (Tele2Sweden)
Tablet or SIM-OnlyAdd-on
Multi-SIM plans share a data allocation acrossmultiple devices
Rogers Wireless, Bell Mobility (Canada), OrangesMobistar (Belgium) 2-5 devices (extra fee mayapply)
Business/SOHO plans: Proximus (Belgium);
Telefnicas Movistar (Spain)
Multi-SIM
Strategy Analytics, 2011
A Single, Shared Data Plan for Multiple Devices
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A Single, Shared Data Plan for Multiple Devices
is More Appealing to Consumers than
Tethering or Mobile WiFi Routers (Portable Hotspot)
Nearly 60% interest in multi-device data plans (multiple devices share data allocation
on one plan) among smartphone owners points to a strong opportunity for mobileoperators as more consumers adopt additional devices
Healthy interest in MiFi-type devices (portable 3G or 4G WiFi hotspot router) and
Tethering through a smartphone, though consumers would prefer embedded mobile
data with a shared data plan for their devices
31 Strategy Analytics, 2011
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
A separate mobile WiFi hotspot
To use mobile phone to connect all my CE devices
A single data plan across all my devices
For connecting my consumer electronics (e.g., phone, modem,PC, tablet) devices I would like...
Strongly Agree Somewhat Agree Neither Agree or Disagree Somewhat Disagree Strongly Disagree
Source: Strategy Analytics Smartphone Owner Survey, January-February 2011
(US, France, Germany, Spain, UK, China)
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Other New Approachesto Mobile Broadband Pricingto Drive Uptake
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Consumers Interested in New Mobile
Broadband Pricing Models
Data only plans for smartphones, night/weekend plans, content-
specific plans would resonate with consumers
How Interested Are You in the Following Pricing Options?
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Monthly unlimited text/chat/email (no voice minutes)
data plan for nights/weekends only
pay for an hour or day of data
pay for content upload/download
unlimited access to social network or favorite websites
Not at All Interested Somewhat Disinterested Neutral Somewhat Interested Very Interested
Source: Strategy Analytics, January 2011, US results
Strategy Analytics
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Content specific plansSocial Networking in Colombia
34
Telefnicas Movistar in Colombia offers a
range of data packages, including a socialnetworking package, a full Internet navigation
package, and cheaper mail and chat options
with no browsing
Telefnica usesDPI to zero-
rate traffic to
specific urls for
Social
Networking
sites; users canalso access
permitted sites
through on-
phone apps.
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Off-Peak Plans Seek to Monetize Available
Capacity When Networks not Congested
In the UK, several operators offer extra bucket of data for use
during off-peak quiet time T-Mobile UK - 1GB monthly data transfer limit, plus a further 1GB allowance to
use during "quiet time" (00:00 - 10:00), then possible speed reduction.
Orange UK - 1GB anytime monthly data transfer limit, plus 1GB "quiet time"
(midnight to 4pm), then 0.05/MB. Unlimited public WiFi with BT Openzone.
Some operators offering weekend only or evening only plans Sky Link (Russia) offers highly differentiated data plans, based on time of day,
hourly volumes, protocol or specific web sites.
Off-peak pricing aims to extract morevalue, attract new customer segments
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Conclusions
Market has moved from one, unlimited data plan to tiered plans; evenunlimited plans may throttle use after a set data limit
Use of WiFi hotspots bundled in with mobile data to supplement capped data
amounts
SIM-only data plans for PCs/tablets are growing rapidly
Big increase over past 3 months, and already account for around 20% of total plans
SIM-only plans key in getting user buying and using bandwidth from operators
A variety of LTE pricing models for modems and handsets emerging
Multi-SIM plans emerging in more markets to drive tablet plan activation
Other pricing models, such as social networking and off-peak, aim to drive
data uptake in new user segments/entry tiers
Strategy Analytics anticipates more user segmentation and pricing innovation,
including flexible plans and content bundling as the mobile broadband market
further matures, LTE enables additional services, and operators implement
network solutions/intelligence that enable new pricing models36
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Questions & Answers
Josie Sephton, Senior Consultant, [email protected]
Susan Welsh de Grimaldo, Director,
Mobile Broadband Opportunities (MBO)
l hd i ld @ t t l ti