Home > Market Research > Mobile Strategies > Future Mobile Pricing: Mobile broadband, content and growth market trends and strategies

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Market Study
Published: December 2009
Pages: 126
Tables: 112
From: GBP 2495.00   Buy Now!
Research from: Informa Telecoms and Media
Sector: Mobile Strategies

Angela Stainthorpe,
Senior Research Analyst,
Informa Telecoms and Media

Future Mobile Pricing Trends systematically analyses the current trends in pricing for mobile services and evaluates the models that will drive profitability and growth in new and evolved services. The report gives strategic consideration to the factors that will affect and be affected by pricing models as the market evolves, using extensive case studies and primary data to support its findings.

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Table of Contents

C H A P T E R 1
E X E C U T I V E S U M M A R Y                     1
Voice, SMS and data pricing trends                  1
Fig. 1.1: Total number of consumer and business tariff plans offered, selected operators, 2Q09     1
Trends in postpaid bundled minutes and bundle cost                3
Trends in prepaid price per minute                    3
Hybrid pricing – prepaid and postpaid are developing into payment mechanisms rather than
discrete customer groups                     3
Fig. 1.2: Survey: What percentage of your subscriber base uses/will use hybrid plans?       4
Mobile broadband pricing trends                  4
Mobile broadband plans are evolving but innovation is still thin on the ground         4
Postpaid plans dominate                    . 5
Fig. 1.3: Average number of prepaid and postpaid plans per operator, 4Q08 and 1Q09      5
Western Europe the only region to experience a fall in average contract prices         6
Multiple GB limits win out but unlimited download volumes remain popular         6
24-month contracts lead in mobile broadband                6
Prepaid mobile broadband favors charging by day, not by MB             7
Data volume the most popular way to charge for mobile broadband           7
Fig. 1.4: Example tariff configurations for mobile broadband, 1H09           7
Fig. 1.5: Survey: Which increments do you use to charge end users for mobile broadband access?    8
Issues for the future of mobile broadband pricing              9
Fig. 1.6: Survey: How long do you think widespread unlimited-usage tariffs will be a sustainable
approach to pricing mobile broadband?                  9
Rising demand for bandwidth challenges return on investment             10
Future pricing models for mobile broadband must become more sophisticated     10
Fig. 1.7: Three axes of development for mobile operator broadband pricing         11
Smart pipe strategies                       11
Fig. 1.8: Walled gardens, smart pipes and dumb pipes             11
Charging by application                      12
Managing quality of service requirement                  13
Network-based traffic control                    13
Sophisticated segmentation                     14
Fig. 1.9: Reasons to bundle and not to bundle mobile broadband           15
Charging by peak/off peak                     15
Mobile content pricing                      15
Current content pricing trends                     16
Fig. 1.10: Global, average on-portal mobile content prices, by type, 1Q09-3Q09       16
Fig. 1.11: Lowest and highest prices, by content type and country, 3Q09          17
Pricing models                         17
Subscription model                       18
Fig. 1.12: Mobile pricing, subscription model               18
Pay-per-unit model                       18
Fig. 1.13: Mobile pricing, pay-per-unit model                18
Rental model                        18
Fig. 1.14: Mobile pricing, rental model                  18
Bundling model                       19
Fig. 1.15: Mobile pricing, bundling model                19
III
Contents
IV
Emerging content pricing models                    19
The case of the Application stores                   19
Advertising-subsidized content                    20
C H A P T E R 2
V O I C E , S M S  A N D  D A T A  P R I C I N G  T R E N D S              21
Voice pricing trends                      21
Key observations                        21
Fig. 2.1: Total number of consumer and business tariff plans offered, selected operators, 2Q09    21
Fig. 2.2: Consumer prepaid, postpaid and hybrid tariffs as percentage of total tariffs by prepaid
as percentage of total subscriptions, selected operators, 2Q09             23
Fig. 2.3: Business prepaid, postpaid and hybrid tariffs as percentage of total tariffs by prepaid as
percentage of total subscriptions, selected operators, 2Q09             24
Trends in postpaid bundled minutes and bundle cost               24
Fig. 2.4: Largest, smallest and median bundle sizes, selected operators, 2Q09        24
Fig. 2.5: Bundle cost by included minutes, selected operators in selected markets, 2Q09      25
Trends in prepaid price per minute                    25
Fig. 2.6: Prepaid price per minute, selected operators, 2Q09             26
SMS pricing trends                      26
Fig. 2.7: Global, selected operators by SMS price, 4Q09              27
Fig. 2.8: Global, selected operators’ SMS prices, by annual change, 4Q08-4Q09        28
Fig. 2.9: Global, annual variation in SMS prices, selected operators, 4Q09         29
Data pricing trends                      29
Fig. 2.10: Average number of prepaid and postpaid plans per operator, 4Q08 and 1Q09      30
Fig. 2.11: Average postpaid contract price by region, 4Q08 and 1Q09          30
Fig. 2.12: Average price per MB, by country, 1Q09               31
Fig. 2.13: Distribution of prepaid billing units for mobile broadband by region, 1Q09      32
Content pricing trends                      32
Fig. 2.14: Global, average on-portal mobile content prices, by type, 1Q09-3Q09       33
Fig. 2.15: Lowest and highest prices by content type and country, 3Q09          33
Fig. 2.16: Cheapest and most expensive content as a proportion of per-capita income, 3Q09     34
Fig. 2.17 Price per unit by number of units affordable, by content type, 3Q09       34
Hybrid pricing                        35
‘Prepaid’ and ‘postpaid’ are developing into payment mechanisms rather than discrete customer groups   35
Fig. 2.18: Survey: What percentage of your subscriber base uses/will use hybrid plans?      36
Hybrid services mix elements of traditional postpaid and prepaid plans, and can come in a variety
of different guises                       36
Monthly prepaid/auto reload                    36
Fig. 2.19: AT&T ‘Pick Your Plan’ range, 4Q09              37
Postpaid spending control                     37
Fig. 2.20: Vodafone Egypt spending control plans, 4Q09             38
Family plans                        38
Fig. 2.21: T-Mobile USA Even More individual and family plan comparison, 4Q09      39
Fig. 2.22: Example use cases for hierarchical family and corporate plans          39
C H A P T E R 3
M O B I L E B R O A D B A N D : C U R R E N T S I T U A T I O N             41
Introduction to the mobile broadband market               41
Technology evolution                       41
Fig. 3.1: Global commercial HSDPA and EV-DO network deployments, 4Q08        42
Why is mobile broadband attracting so much attention?               42
Mobile broadband subscription development                 43
Fig. 3.2: Top 10 global mobile broadband markets by subscriptions, 4Q08         43
Fig. 3.3: Global total broadband subscribers, by fixed and mobile, 2008-2013        44
Mobile broadband revenues                     . 45
Fig. 3.4: Top 20 global operators’ non-SMS revenue as % total data revenue, 4Q08       45
Fig. 3.5: Global mobile data revenues by broadband and non-broadband, 2008-2013      46
Mobile broadband traffic                      46
Fig. 3.6: Global mobile data revenues and data traffic, 2008-2013           47
General conclusions                       48
Mobile broadband numbers are set to soar                 48
Mobile broadband drives revenue boom                  48
Mobile broadband will have a global reach                 48
Mobile broadband will create traffic pain                 48
Mobile broadband is being driven by growth in HSDPA              49
Mobile broadband will drive overall growth of broadband             49
Data volume the most popular way to charge for mobile broadband         49
Fig. 3.7: Example tariff configurations for mobile broadband            49
Fig. 3.8: Survey: Which increments do you use to charge end users for mobile broadband access?    50
Fig. 3.9: Survey: What is the principal method you use to determine mobile broadband pricing levels?  51
Fig. 3.10: Survey: What are your top three priorities when pricing mobile broadband services?    52
Fig. 3.11: Survey: How long do you think widespread unlimited-usage tariffs will be a sustainable
approach to pricing mobile broadband?                  52
C H A P T E R 4
M O B I L E  B R O A D B A N D :  F U T U R E  D E V E L O P M E N T S            53
Strengths and weaknesses of mobile broadband tariff elements          53
Time-based charging                      53
Fig. 4.1: Strengths and weaknesses of time-based charging for mobile broadband        53
Volume-based charging                       55
Fig. 4.2: Strengths and weaknesses of volume-based charging             55
Special case: unlimited volume                     57
Fig. 4.3: Strengths and weaknesses of unlimited-volume charging           57
Speed-based charging                      58
Fig. 4.4: Strengths and weaknesses of speed-based charging             59
Tariff model examples                       60
Time-based subscription with unlimited volume                60
Fig. 4.5: Tigo Colombia Internet Movil plan                60
Fig. 4.6: M1 Singapore prepaid mobile broadband plan              60
Fig. 4.7: Orange and SFR France micro top-up mobile broadband plans          61
Fig. 4.8: 3 Hong Kong, O2 Czech Republic and Swisscom Switzerland unlimited monthly plans    61
Time-based bundle with volume usage cap                 61
Fig. 4.9: Movistar Spain mobile broadband Tarifa Diaria             62
Fig. 4.10: T-Mobile UK Broadband Plus plan                62
Fig. 4.11: Vodafone UK postpaid mobile broadband plan             62
Fig. 4.12: Vodacom South Africa mobile broadband plans             63
Volume bundle with or without time-based cap (validity period)             64
Fig. 4.13: Vodafone UK and Optus Australia prepaid mobile broadband plans        64
Pay-per-use tariffs: time- or volume-based                 64
Fig. 4.14: Smart Communications Philippines prepaid mobile broadband plan        65
V
Adjustable-threshold tariffs                     65
Fig. 4.15: Orange France and SFR adjustable mobile broadband plans          65
Unlimited volume with fair-use speed reduction                 66
Fig. 4.16: Claro Peru prepaid mobile broadband plans             66
Fig. 4.17: Movistar Argentina Plan BAM Ilimitado             66
Speed tiers with fair-use speed reduction                  67
Fig. 4.18: Indosat Indonesia ISAT mobile broadband plans             67
Fig. 4.19: Etisalat Egypt unlimited mobile broadband plans            67
Paying by time of day – peak/off peak                   67
Issues for the future of mobile broadband pricing              68
Fig. 4.20: Survey: How long do you think widespread unlimited-usage tariffs will be a sustainable
approach to pricing mobile broadband?                 . 68
Rising demand for bandwidth challenges return on investment             69
Fig. 4.21: Global mobile data revenues and data traffic, 2008-2013          69
Future mobile broadband customers will need new wave of tariff structures         70
Future pricing models for mobile broadband must become more sophisticated     72
Fig. 4.22: Three axes of development for mobile operator broadband pricing         72
Smart pipe strategies                       73
Fig. 4.23: Walled gardens, smart pipes and dumb pipes              74
Charging by application                      75
Fig. 4.24: Survey: Do you charge for applications separately from access?          75
Fig. 4.25: Survey: Which applications do you price separately?            76
Fig. 4.26: Example operators offering applications charged separately          76
Fig. 4.27: Strengths and weaknesses of charging for mobile broadband by application      77
Managing quality of service requirement                  77
Fig. 4.28: Strengths and weaknesses of charging by quality of service           78
Partnerships with Internet content providers                 79
Fig. 4.29: Strengths and weaknesses of partnering with Internet content providers       80
Network-based traffic control                    80
What is policy control?                      81
Fig. 4.30: Openet’s example uses of policy management              82
Current status of traffic shaping                    82
Fig. 4.31: Survey: Do you employ any active traffic shaping or prioritization of application types?   82
Fig. 4.32: Survey: If yes or planned, what methods do or will you employ?         83
Fig. 4.33: Survey: Do you include a ‘fair-use’ limit in your consumer contracts?        83
Fig. 4.34: Survey: What happens when a user nears/reaches the fair-use threshold?       84
Sophisticated segmentation                     84
Fig. 4.35: Reasons to bundle and not to bundle mobile broadband           85
Charging by peak/off peak                     85
Fig. 4.36: Strengths and weaknesses of charging peak/off-peak            86
Fig. 4.37: Proximus Belgium Mobile Internet packages, July 2009           86
Fig. 4.38: Orange Romania Night and Weekend mobile broadband plans         87
Demographic offers                        87
‘Pay once’                          87
C H A P T E R 5
M O B I L E C O N T E N T                      89
Introduction to the mobile content market                89
Fig. 5.1: Global mobile content and services revenues, by region, 2008-2013        90
Fig. 5.2: Global mobile content and services revenues, by segment, 2008-2013        91
VI
Fig. 5.3: Global mobile content-only revenues, by segment, 2008-2013          92
Content pricing trends, 2009                    92
The general trend                        92
Fig. 5.4: Global, average on-portal mobile content prices, by type, 1Q09-3Q09       93
Fig. 5.5: Lowest and highest prices, by content type and country, 3Q09          93
Fig. 5.6: Cheapest and most expensive content as proportion of per-capita income, 3Q09      94
Fig. 5.7: Price per unit of content by number of units affordable per month, by content type, 3Q09   94
Ringtones and ringback tones                     95
Fig. 5.8: Price per ringtone and ringback tone by number of tones affordable per month,
by region, 3Q09                       96
Games                           96
Fig. 5.9: Price per game by number of games affordable per month, by region, 3Q09       97
Music                           97
Fig. 5.10: Price per full-track download by number of tracks affordable per month, by region, 3Q09   98
Pricing models                         99
Subscription model                      99
Fig. 5.11: Mobile pricing, subscription model               99
Fig. 5.12: Survey: Which subscription-based (i.e. recurring) tariffs do you offer for mobile content?   102
Pay-per-unit model                      102
Fig. 5.13: Mobile pricing, pay-per-unit model                102
Rental model                        104
Fig. 5.14: Mobile pricing, rental model                 104
Fig. 5.15: Survey: Do you offer pay-per-play or rental models for different types of mobile content?   105
Bundling model                       106
Fig. 5.16: Mobile pricing, bundling model                106
Emerging content pricing models                  107
The case of the Application stores                    107
Fig. 5.17: Application stores launch dates, as at end-1H09             108
Application prices                      109
Fig. 5.18: Pricing and billing information from selected application stores, 1H09       109
Fig. 5.19: Apple App Store and Blackberry App World, free versus paid-for Apps, by category, 3Q09   110
Fig. 5.20: Average price for top 100 paid-for apps on Apple App Store (US) and
Blackberry App World (US), Aug-09                  111
Fig. 5.21: Ratio of average application price to lowest achievable price per application,
Blackberry App World and Apple App Store, Aug-09             112
Advertising-subsidized content                    112
Fig. 5.22: Mobile pricing, advertising-subsidized model             113
Fig. 5.23: Survey: Do you use advertising to subsidize content?            113
Fig. 5.24: Asia, top 10 mobile sites, selected countries, May-09            114
Fig. 5.25: Top 10 countries for banners served on BuzzCity mobile advertising network, 3Q08-2Q09  115
Unlimited downloads                       116
Fig. 5.26: Mobile pricing, unlimited downloads model              116

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