Teligen Tariff and Benchmarking

Strategy Analytics is a leading expert on telecommunications tariffs research and analysis, with over 20 years of experience supporting OECD and EU operators and regulators.

November 24, 2011 15:07 jsephton

Since the introduction of mobile data plans, pricing has been largely based on the amount of data used, with little regard to content. However, anecdotal evidence from the market increasingly points to the emergence of a potentially very disruptive mobile pricing model - namely the bundling of data access and content.

Mobile providers have toyed with content in their pricing models in the past - some more so than others. For example, back in 2009, Three in the UK offered two years' free access to Spotify Premium (which allows on-demand streaming of music to mobile phones) with the network?s first Android phone, the HTC Hero, based on a £35/month tariff (and £99 for the phone). This 'free' model was designed to kick-start streaming habits, and to generate interest in Spotify, rather than provide a sustainable template for future offers. Access to Spotify Premium today tends to be offered as a trial for a limited time period within a contract - typically between two and six months -before reverting to a regular monthly subscription. This is true of other similar services that are available today in other countries. Rdio, offered through Telus in Canada is one such example, where the content service is a distinct add-on to the service.

Not all operators are separating out content from the bundle. In Denmark, TDC has bundled in access to its streamed music service, TDC Play, into its mobile offerings, effectively 'hiding' the cost of subscription, with plans ranging from 129 DKr to 499 DKr per month including TDC play. This approach has proved successful, with TDC managing to attract a relatively high proportion of customers to the Play bundles.

Orange is probably one of the most active operators in terms of pursuing a content-focussed strategy. It is already well known for its various content-style offers in the UK market, including the free weekly iTunes movie download service that it launched in August of this year. However, it stepped up a gear in September of this year, when it launched its 'Swapables' offerings. Swapables works on the basis that subscribers to top-tier plans will be given access to a range of content options, including Deezer Mobile, which provides mobile access to Deezer's on-demand unlimited premium music service, Mobile TV (selected channels), Sky Sports Mobile TV, 247 Sports (sports alert service), The Times and Sunday Times newspapers, and MTV video clips, among others. Under Orange's 'Panther' packages, which start at £35 per month, subscribers can sign up for 2 services, and can also change their service choice from month to month. What is notable with Swapables is that, for now at least, the cost of the Panther packages have not changed. This means that the content offered under Swapables will not generate additional subscriber revenue for Orange. Rather this will come in the form of data add-ons and additional content purchases. And Orange will no doubt try to migrate users up towards the Panther packages

Orange hasn't just been active in the UK, when it comes to content bundling, of course. Orange France has also been very active in this area. As a major pay TV (to the home) provider in France, it has been bundling in access to its pay TV services, VoD/Movies on Demand services for a while, with its 'Orange Cinema' and 'Origami Star' packages. It also has had tremendous success bundling in streaming music into several data plans, through its partnership with Deezer. Just five months on from signing the agreement for the Deezer Premium + service, which is distributed through Orange's internet and mobile networks, the service had attracted more than 500,000 subscribers.

One area which is seeing a lot of interest from mobile operators is that of Facebook. Access to the social network is increasingly bundled into offerings from mobile offerings, with access to Facebook often being zero rated (i.e. not counting against the data allowance).

We are likely to see more content-based offerings emerging in the mobile arena going forward, and there will be doubtless a lot of testing around which pricing approach is most successful - one which allows users to choose their content add-ons, or one which offers a simpler but potentially more expensive flat-rate approach. There are pros and cons with each of course, and the probability is that both will prevail. Additionally, we are likely to see more experimentation around access to content that doesn't count against monthly usage allowances. One thing is clear with this fast changing picture - in the world of mobile data, the issue of how content is handled within the overall delivery mechanism will be a key strategic focus for mobile providers.


September 14, 2011 14:46 jsephton

When I opted for a mobile deal recently with enough minutes, text and web to satisfy my fairly modest needs, plus a decent smartphone thrown in for good measure, for a mere £10 per month, it seemed a pretty good offer - almost too good to be true, when I considered what my friends and family racked up on their mobile plans. The arrival of my first mobile bill under the new plan confirmed my suspicions, when it came in at 50% higher than I expected. However, closer investigation revealed that the culprit behind the bill-shock was a single, relatively short call to an 0800 (freephone) number that I had to make while I was away from my fixed line. At the time I made the call, I was forewarned that I would be charged, as these numbers fell outside of my monthly allowance. What I wasn't told was how much. In the whole scheme of things, the extra £5 doesn't exactly break the bank, but it illustrates how easy it is to increase monthly spend on calls from mobiles that are simply, at times, unavoidable - especially given the amount of customer service-type numbers which now begin 08 or 05, a typical prefix for many non-geographic numbers. A quick glance at the cost to call these increasingly prevalent numbers from UK mobile providers shows that, while there is considerable variation across the different providers, none of the charges are particularly insignificant, as illustrated in the table below[1]. Moreover, some providers charge the same for freephone (0800) as for 0845 and 0870 calls.

image

On a positive note, there is a downward trend on some of these prices - Orange and T-Mobile, for example, recently reduced their charges to freephone numbers. While this is a step in the right direction, it is not one that has been taken by all providers, and overall, charges remain high.

In December 2010, Ofcom published a consultation entitled 'Simplifying non-geographic numbers', and while it is a very detailed document, it makes for interesting reading, highlighting issues such as lack of awareness around pricing, and the correspondingly high costs that consumers can face when accessing certain non-geographic numbers. Within the consultation, Ofcom proposed to standardise and simplify how non-geographic numbers are priced, to promote transparency and competition in delivering services through these numbers. Importantly, it also proposed to make 0800 numbers free from mobiles.

While this is good news for mobile users, until such proposals are put into force, users are still contending with high costs for non-geographic calling. There are, however, ways to deal with this. Software developer Slackersoft has developed a free app for Android devices which, when activated, will automatically intercept calls to numbers beginning 0870 and 0845 and, where possible, suggest available alternatives. Similarly, telecoms provider Skycom offers an app called 0800 Wizard. The app, which runs on iPhones, Android and Blackberry devices, is also free to download, and will offer an alternative 01 or 02 number when a freephone call is made through the 0800 Wizard dialler.

Since my ‘bill shock’ I have used both of these apps a lot, and I estimate that they have saved me a not-insignificant amount of money. At times, getting the right number can be fiddly, and it is not always a single step process. But it means that I have much better control over my mobile spend. And in the meantime, I will look forward to the day when non-geographic charges from mobile are more in line with those from fixed line, and in particular, when freephone from mobile is truly free.


[1] Charges shown are based on pay-monthly plans. Per call costs may also be incurred in some instances. 0800 refers to freephone numbers, which are free of charge from a landline. 0845 and 0870 refer to numbers that will incur a charge from landline, usually (but not always) in line with local and national call charges respectively.