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Telcos Pricing Strategies: Bridging the Gap Between Skyrocketing Traffic and Flat Revenues

  • ID: 2383129
  • Report
  • November 2012
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  • 3 (GB)
  • CSL (One2Free, SG)
  • KT (KR)
  • O2 (GB)
  • Sprint Nextel (USA)
  • TimeWarner Cable (USA)
  • MORE
This report focuses on the major trends in pricing policy, and highlights innovative strategies.

It analyses trends in the mobile market for voice and SMS services, and takes a close look at mobile data services.

It also examines pricing strategies for the fixed network market, as well as service bundles.

- In a context of relatively low prices and increasing traffic, what are the major trends in pricing?
- Are different pricing strategies being used for ultrafast broadband (fiber and LTE)?
- Will operators have separate plans between the various telecommunication devices and services?
- What pricing strategies are operators using to counteract OTT services?
- For their part, are fixed network operators starting to limit the amount of data consumed?
- What forms of convergence are we seeing between fixed and mobile pricing?
- What multi-play strategies are operators adopting?

The report ships with a slideshow providing the reader with a synopsis of the study’s essential points. It enables you:
- to share the principal findings rapidly with your colleagues
- to use the slides for your internal presentations
- or to simply browse through the main thoughts of the market study at a glance

About the Contributors

Sophie LUBRANO, Head of Usages Practice
A member of the IDATE team since November 2000, Sophie Pernet is specialised in demand analysis, particularly in the area of consumer applications. Sophie also contributes her expertise in supply analysis, notably companies’ Internet service strategies. Her assignments focus on various aspects of the telecom industry: Internet, media, landline and mobile telephony. Prior to joining IDATE, Sophie was an economic consultant for B.I.P.E., where she was in charge of telecom market monitoring. Ms. Pernet is an economist, with a post-graduate degree from ESLSCA (Ecole Supérieure Libre des Sciences Commerciales Appliquées).

Didier POUILLOT, Head of "Telecom Strategies" Business Unit

Christoph PENNINGS, Head of Regulation Practice
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3 of 5


  • 3 (GB)
  • CSL (One2Free, SG)
  • KT (KR)
  • O2 (GB)
  • Sprint Nextel (USA)
  • TimeWarner Cable (USA)
  • MORE
1. Executive summary
1.1. Context
1.2. Pricing strategies for mobile services
1.2.1. Major trends
1.2.2. Mobile data services
1.2.3. Multiple device mobile plans
1.3. Pricing strategies for fixed services
1.3.1. Major trends
1.3.2. Two types of strategy for fiber connection pricing
1.4. Bundles
2. Methodology
3. Introduction
3.1. Context
3.2. Analysis scope
3.3. The regulatory issues
3.3.1. Lower interconnection charges and local loop access rates
3.3.2. New regulations to combat bill shock
4. Mobile telco pricing
4.1. The trend toward an unlimited model for voice and SMS
4.1.1. Changes in traditional models for mobile voice pricing
4.1.2. The trend toward unlimited voice plans
4.1.3. The trend toward unlimited plans is even more pronounced for SMS
4.1.4. Examples of innovative pricing
4.2. The trend toward convergence of prepaid/postpaid plans
4.2.1. Differences in national context
4.2.2. An overall downward trend in prepaid
4.2.3. Hybrid plans
4.2.4. The new challenges facing prepaid services
4.3. Mobile data: The trend toward tiered pricing
4.3.1. Pricing factors
4.3.2. A trend toward tiered pricing
4.3.3. LTE pricing, an opportunity to increase ARPU
4.3.4. Innovative plans
4.3.5. Prioritization services
4.3.6. The need for educating consumers
4.3.7. Summary
4.4. Devices: Is there a trend toward separating telco devices from call plans?
4.4.1. A profusion of potentially connected devices
4.4.2. The issue of subsidized devices
4.4.3. Is there a trend toward separating handsets from call plans for postpaid?
4.4.4. Maintaining subsidies for high-end devices
4.5. The trend toward shared plans across multiple devices
4.5.1. Plans for subscribers with multiple devices: a way to stimulate the use of tablets on cellular networks
4.5.2. Family plans
4.5.3. All-in-one: Multi-user, multi-device data sharing plans
4.5.4. Sharing access to mobile networks
4.5.5. Summary
5. Fixed broadband pricing
5.1. Introduction
5.1.1. Less complex than mobile pricing
5.1.2. Flat ARPU with upgraded services driving price fall
5.2. Tiered pricing by data speeds
5.2.1. Pricing factors
5.2.2. Tiered pricing plans by data speeds
5.2.3. Naked 'DSL' not generalized
5.3. A trend toward capped traffic and traffic management
5.4. Minimal guarantees on the quality of service
5.5. Two types of strategy for ultra-fast broadband pricing: continuity and valuation
5.5.1. The challenges
5.5.2. Mirroring broadband pricing
5.5.3. Two types of strategy for fiber pricing: Continuity with broadband or valuation of ultra-fast broadband
5.6. Summary: Tiered pricing based on speed still predominates, traffic management is emerging
6. Services bundles
6.1. Fixed-mobile services bundles
6.1.1. Operator positioning in quadruple play services
6.1.2. Quadruple play still in its infancy
6.2. Integration of value-added services
6.2.1. Content strategy
6.2.2. Smart access

Table 1: Benchmark of postpaid mobile voice plans
Table 2: AT&T's range of national mobile voice plans
Table 3: Orange's Origami range of plans
Table 4: Benchmark of SMS pricing in the United States and Europe
Table 5: Change in AT&T's SMS offerings toward unlimited
Table 6: SFR's range of "blocked" packages
Table 7: Orange's range of capped plans
Table 8: Factors in mobile data pricing
Table 9: Postpaid mobile data plans for smartphones
Table 10: Plan strategies for operators offering LTE (for postpaid smartphones)
Table 11: Vodafone Germany's 3G and LTE range of plans
Table 12: TeliaSonera Sweden's range of plans (postpaid)
Table 13: O2 Germany's range of prices
Table 14: The Swisscom Natel Infinity range of plans
Table 15: Sprint's range
Table 16: T-Mobile USA's range of plans
Table 17: AT&T's shared voice minutes plans
Table 18: Verizon's "Share Everything" plans for voice, SMS and data
Table 19: Verizon's "Share Everything" plans for data only
Table 20: AT&T's data sharing prices
Table 21: 3 UK's MiFi plans
Table 22: T-Mobile USA's plans
Table 23: Speeds offered for Internet access (download speeds)
Table 24: Time Warner Cable
Table 25: "Naked DSL" availability of 1- & 2-play broadband plans
Table 26: Capped broadband tariffs
Table 27: BT's fixed Internet access plans
Table 28: Virgin Media's plans
Table 29: Traffic management for VM's basic plans
Table 30: Traffic management for VM's mid-range/premium plans
Table 31: Commercial plans for ultra-fast download speeds
Table 32: AT&T's plans: Comparison between broadband/fiber prices (USD)
Table 33: Orange's Internet access plans
Table 34: Verizon's Internet access plans
Table 35: Telefónica's Internet access plans
Table 36: Deutsche Telekom's Internet access plans
Table 37: Difference between broadband and ultra-fast broadband pricing policies
Table 38: Internet access pricing strategies
Table 39: Operator positioning in quadruple play services

Figure 1: Proportion of postpaid subscribers in the subscriber base in 2011
Figure 2: Change in the proportion of postpaid subscribers by country, 2003-2011
Figure 3: SFR's range of capped plans
Figure 4: TIM's plan for subscribers or prepaid customers (Ricaricabili) linked to a credit card
Figure 5: MetroPCS' pricing plans
Figure 6: Verizon Wireless' bandwidth consumption chart
Figure 7: Verizon Wireless' tool for calculating consumers' bandwidth requirements
Figure 8: SingTel's data usage counters
Figure 9: Data plan strategies (postpaid plans for smartphones)
Figure 10: The PS Vita console as marketed by Vodafone UK
Figure 11: Change in the smartphone installed base
Figure 12: Growth in tablet installed base
Figure 13: SingTel's subsidized handset plans
Figure 14: SFR's handset renewal offering
Figure 15: AT&T's trade-in program
Figure 16: Refurbished handset offerings from Verizon and AT&T
Figure 17: Vodafone's offer of free financing
Figure 18: Operators offering SIM-only plans
Figure 19: Handsets available for purchase or lease by Free
Figure 20: SFR's range of postpaid plans
Figure 21: SFR's MultiSurf option: multi-SIM plan
Figure 22: The mobile hotspot principle of operation
Figure 23: 3's MiFi router
Figure 24: Vodafone UK's Sharing Hub
Figure 25: Strategies for multi-device plans (postpaid plans for smartphones)
Figure 26: Changes in Deutsche Telekom's dual flat pricing and downstream speed
Figure 27: Changes in French broadband bundles and ARPU
Figure 28: TWC's decision-making tools
Figure 29: Usage distribution
Figure 30: Home screen offering the priority pass
Figure 31: FTTX coverage & uptake
Figure 32: Internet speeds offered by Free
Figure 33: Pricing policy comparison between broadband and ultra-fast broadband
Figure 34: Operators' positioning for ultra-fast broadband
Figure 35: Operator positioning in quadruple play services
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- Vodafone (GB)
- Vodafone (ES)
- Vodafone (IT)
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