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.

March 14, 2013 14:31 jsephton

For those interested in mobile pricing, and, more specifically, price benchmarking, you might be interested to learn that Teligen, the Pricing and Benchmarking division of Strategy Analytics has just released a short report detailing a system it is developing which will allow users to test new mobile voice and data tariffs, and compare them against existing tariffs in a given market.

Teligen's involvement in benchmarking and tariff tracking goes back some 30 years in the field, along with its involvement with the OECD to provide price benchmarking results based on OECD methodologies spanning over 16 years. With increasing developments being observed around approaches to mobile pricing, however, we have seen a need for operators to be able to explore how new tariffs might behave under both pre-defined and customised usage profiles, as well as how they might change as different criteria within a profile changes.

This has led to Teligen developing a new system, which will allow users to input a set of 'tester' or proposed tariffs to be compared with existing tariffs in a given market, and look at this in the context of a range of different outputs, to help shape these new tariffs. The underlying OECD methodology is used as a basis, but the system will allow users to easily manipulate inputs, around both target usage profile(s) and tariff details, and view a variety of outputs that are more tailored to the tariff analysis.

For example, a test tariff can be altered through quick and easy changes to prices and tariff parameters, and several test tariffs can be shown simultaneously. This is particularly useful, as it will show how sensitive a tariff is to changes in usage, where the key sensitivities lie and what this means for an operator in terms of revenues. Output can be shown for an individual scenario (for example, the revenue that a tariff will generate for a designated number of minutes, SMSs and MB of data), or alternatively, it will be possible to view the revenue profile of a given tariff in a 3D output, and see immediately, in a single graphic, how this will change as specific criteria change - such as the number of minutes or the number of SMSs.

The Mobile Price Analyser will be launched in the near future, but if you want some more information about what it will offer, we have a complimentary insight which is available for download, which provides a good overview.


January 25, 2013 10:35 jsephton

UK regulator, Ofcom, has recently released the 2012 update of the International Communications Market Report, which compares the availability, take-up and use of services in the UK and a number of comparator countries (France, Germany, Italy, Spain and the USA).

As in previous years, the report covers a number of areas, including:

  • an analysis of the UK market in context
  • comparative international pricing, comparing the typical prices people for a range of different 'baskets' of communications services
  • a review of both the television and audio visual market and the radio and audio market
  • an assessment of internet use, in terms of platforms and devices, as well as content and consumption
  • comparative international data on the communications sector, comparing the UK to a range of comparator countries in order to assess how the UK is performing in an international context.

The comparative international pricing element of the report, which is based on data and systems supplied by the Teligen division of Strategy Analytics, compares five 'baskets' of services - fixed voice, mobile voice, fixed broadband, mobile broadband and pay TV - representative of the communications use of five typical households. The analysis shows that the UK remains very price competitive, offering the lowest price for all five baskets when a weighted average of single service pricing was taken into account and for four of the five baskets when looking at 'best-offer' or lowest possible pricing.

The low mobile prices in the UK are a key factor in the UK positioning (although, fixed voice and fixed and mobile broadband prices in the UK are also comparatively low), however, the study found evidence that UK communications prices were increasing in nominal terms, and that this was mainly down to increasing mobile prices. In the year to July 2012, the weighted average cost of more than half of mobile connections in the UK increased by between 5% and 31% (in nominal terms).

HD premium pay-TV services were the main area where the UK did not perform well - partly due to the fact that Sky bundles a large number of channels in its premium pay-TV package, as well as charging its satellite TV customers an additional £10 a month to let them access premium channels in HD.

In the analysis the results for France were also favourable, with France having the lowest 'best-offer' including multi-play price for the 'connected family' household[1]. Notably, for this household, France was significantly cheaper than in the UK as a result of the availability of a low-cost quad-play bundle of fixed voice, fixed broadband, mobile and pay-TV services. France also had the second lowest 'weighted average' prices for all five households.

Notably, consumers in most of the six countries analysed were able to make cost saving of between 5% to 40% by buying bundled packages rather than purchasing services individually.

The full study results, along with detailed information on the methodology used, are available for download on Ofcom's website.


[1] A connected family is defined as a family of four with generally high use of several communications technologies. A definition of a connected family can be found in the main report from Ofcom.


January 25, 2013 10:06 jsephton

Strategy Analytics' Pricing and Benchmarking systems, offered through its Teligen division, have been supporting operators and regulators around the world for more than 30 years, helping them monitor and evaluate pricing strategies for fixed and mobile voice and data services.

Once again, Strategy Analytics will be holding two exclusive breakfast presentations at MWC 2013 which will provide insights into smart devices and smart experiences in a multi-screen world, as well as adjacent market opportunities and new business models for service providers. During the briefings, we are pleased to be able to offer attendees the opportunity to see a live demonstration of both our OECD Mobile Price Benchmarking Service and OECD Mobile Broadband Price Benchmarking Service.

The demonstration will allow you to see the powerful analytical abilities contained within our systems, which have helped our many customers answer critical questions such as:

  • What are the prices and price structures of our competitors' services, and how do we compare?
  • Which tariffs favour different kinds of usage?
  • Where do we rank against comparable markets?
  • What is the cost effect for end users when usage escalates?

Demonstrations of a number of other exciting Strategy Analytics' services - the Handset Country Share Tracker, ConsumerMetrix survey database, as well as PriceTRAX and SpecTRAX - will also be available.

If you would like to register for this breakfast event click HERE-->>


January 24, 2013 13:40 jsephton

Based on findings from the most recent update of Teligen's OECD Fixed Broadband Price Benchmarking service, which considers more than 120 ISPs in 40 countries around the world, residential users can expect to pay on average, between USD PPP 27 and USD PPP 68 per month for broadband and related services. The cost will vary based on the speed of service and whether users opt for standalone broadband or a bundle of services with some combination of broadband, phone and television. Note that these costs only include basic levels of phone and television service that will be included in a multiplay bundle, and do not take into account cost associated with service add-ons, in the form of premium television channels, or additional call bundles, which will attract additional charges over the basic service offerings.

The two tables below show the average monthly cost in US dollars (PPP) for residential broadband services - both standalone and multiplay - across 40 European and OECD countries, and the incremental cost of various multiplay combinations over standalone broadband.

Table 1: Average monthly cost in USD PPP for residential broadband services, December 2012

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Source: OECD Fixed Broadband Price Benchmarking, December 2012 update

Table 1: Incremental cost of phone and television service over standalone broadband, December 2012

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Source: OECD Fixed Broadband Price Benchmarking, December 2012 update

The incremental cost for phone service ranges from just under 8 USD PPP per month, to over 14 USD PPP per month, while the incremental cost for TV is just over 8 USD PPP per month to almost 17 USD PPP per month. As the speed of service increases and with broadband services more likely to be fibre-based, the incremental cost of TV decreases. By contrast, increases in broadband speed results in an incrementally more expensive phone service. Users taking all three services (broadband, phone and TV) on average pay an extra 21 USD PPP month, irrespective of speed.

A more detailed analysis of broadband price development is available in the recently published insight, 'Broadband prices driven by increasing speeds', which is available for free download.


August 3, 2012 14:18 jsephton

Broadband services offerings have moved into a period of consolidation, with gradual rather than dramatic changes to both pricing and service features.

Based on an analysis current and past updates of Teligen's Fixed Broadband Price Benchmarking Service, we have observed relatively small shifts in the areas of price, download speeds and service bundling, with the majority of activity happening at the higher service end, e.g. higher speeds of standard and bundled services.

Pricing for lower speed services have remained relatively static, while higher speed (30 Mb/s and above) standalone and bundled services have fallen by 3.5% on average over the last quarter. This less dynamic shift compared to services such as mobile, for example, is in line with what we would expect - subscribers to fixed broadband services, especially when they include add-on services such as phone and television, are unlikely to change provider on a frequent or regular basis, due to the nature of the service. Providers recognise this, and have reflected this in their approach to pricing.

Rollout of higher-speed services, too, is a gradual process - average advertised download speeds have increased by less the 1.5 Mb/s since March 2012, and one which is more evident when looking at changes over the course of a year, or even longer.

Going forwards, we expect to see a continuation of current trends, with gradual, rather than dramatic shifts in both pricing and service features.

A more detailed analysis of these developments is available for free download.


July 18, 2011 14:38 jsephton

Release output from a price benchmarking exercise, particularly an international one, into the public domain, and it is a fairly sure bet that it will generate criticism from some camps about both the methodology and the accompanying results. After all, regardless of methodology, some providers and countries will appear more expensive than others, and while those that compare favourably will seldom complain, those that don't will often want to dispute the findings, and may even want to tweak the methodology so the output suits them better. At the end of the day, however, unsatisfactory results may simply be a result of high prices, or non-advantageous price structures.

That isn't to say it is wrong to challenge any benchmarking approach - after all, a benchmarking methodology can only really be considered robust if it can stand up to close inspection, and still be considered acceptable by a sufficient majority.

Almost all of Teligen's price-benchmarking services are based on OECD methodology. The reasoning behind this is clear. When Teligen began working with the OECD in 1995, to produce official OECD benchmarking output, the importance of working with a robust, credible approach was paramount. Central to the OECD approach is the concept of bottom-up baskets, which considers how consumers and businesses actually use telecoms services. The OECD and Teligen have together, created an approach where the methodology is developed through a comprehensive process that allows affected parties the opportunity to contribute and comment throughout.

Building representative baskets is no easy task, because, in reality, there is no 'typical' user. Usage patterns will vary from individual to individual, and will be heavily impacted by where they are in the world. For example, in the US, mobile pricing is often based on large 'buckets' of minutes, offered at a flat rate, in part to deal with the received party pays regime; post-paid plans proliferate, and prepaid plans are much less prevalent. On the other hand, in countries where there may be issues of affordability, prepaid plans will tend to dominate, and typical usage patterns will reflect this.

Another issue to take into consideration is how users actually select their tariffs. Users will often find themselves constrained by factors such as supplier loyalty, long term contracts that don't allow them to take advantage of the current best deal', or will simply suffer from inertia, meaning that they are not getting the best option for them - so how should these nuances be factored in?

In reality, these factors around selection only matter when users are already part way into a contract (with the exception of supplier loyalty). From a benchmarking perspective, it makes sense to assume that a consumer is buying a service from new, and seeks out the necessary information to enable them to make informed, rational decisions, as this creates as level a playing field as possible. The key is that the underlying system is able to choose from all available pricing plans - something which is central to Teligen's approach within its benchmarking services.

There are always levels of complexity that can be added around how users select tariffs, for example, by considering that consumers don't just buy the single lowest cost option, but use several different tariff plans simultaneously, as might be the case with mobile. However, when comparing across a number of countries internationally, such complexity may prove too difficult to incorporate in a sufficiently neutral way, and if not done properly, may undermine the credibility of any output. That is not to say that it can't be done, but rather, care needs to be taken, and the benefit of building in complexity needs to outweigh any adverse impact that this might have on the robustness of the methodology.

Currency conversion can also prove contentious for some. Cross country results have to be presented in a single currency. Irrespective of which currency is chosen, however, standard market rates ignore the fact that the purchasing power of a currency in one country may differ significantly from that in another - an effect we often see when we travel abroad. To deal with this, the use of purchasing power parities to 'normalize' prices is useful, particularly when measuring service costs as set by operators. Purchasing power parities (PPPs) are conversion factors that equalize the cost of goods and services across the countries that are being compared. Comparisons made using PPPs present a more accurate picture of how prices actually compare across countries as seen from a consumer point of view. Like any aspect of benchmarking, the use of PPPs may be contested, and the whole debate around how to normalize prices is one that is too broad to be covered within this paper. What is important, however, is that the issue of normalization is recognized and dealt with in a consistent and broadly accepted way.

A final point of contention around the use of baskets comes in the form of ARPU (average revenue per user). Critics of usage-based baskets often point to ARPU as a better measure of comparability across countries. Similar to the discussion around PPPs, this is a paper in its own right, however it is probably sufficient to say here that ARPU is a measure of the financial value of a user or traffic minute for each operator, and is based on the revenue and traffic reported by the operator for financial purposes. It does not necessarily reflect the prices experienced by end users. ARPU has a role of course, but one that rests squarely in the world of financial and market analysis. Baskets on the other hand, are specifically designed to measure the price level of an operator's cheapest offer, for a particular type of user, and are based on end user prices and end user behaviour.

At the end of the day, benchmarking is an art rather than a science, and like any art form, any methodology will have both its supporters and its critics. So long as it has been carefully constructed and tested, is regularly evaluated and has wide acceptance, until some magic wand is available that can suggest an alternative approach that creates a completely unbiased, fair, transparent and credible result, then our suggestion is to stick with the knitting. And in the meantime, don't set out to shoot the piano player, but maybe begin by taking a look at the underlying price levels and structures instead.


May 10, 2011 16:48 jsephton

The Hong Kong regulator, OFTA (the Office of the Telecommunications Authority) has just released the results from a study which compares the prices of telecoms services in Hong Kong with 6 cities around the world; Copenhagen, London, New York, Shanghai, Singapore and Tokyo. The study, which was conducted by the Teligen division of Strategy Analytics, looks at combinations of services used by a number of typical households and businesses - namely fixed and mobile voice services, fixed and mobile broadband services, leased lines and pay-TV - and compares the cost of these 'service bundles' across different cities. The profiles used in the analysis were chosen to be as representative as possible, covering both low and high usage.

Across the range of baskets, Hong Kong was found to compare very favourably with the other six cities under study. Both residential and business users generally pay the lowest telecoms charges in the study. In particular, prices for fixed and mobile voice services are very competitive - often a fraction of those paid by users in the other cities in the comparison.

The full study results, along with detailed information on the methodology used, are available for download on OFTA's website.


May 10, 2011 14:26 jsephton

There has been a lot in the press about roaming rates set by European mobile providers, but it seems that they aren't the only ones facing regulatory pressure around this highly debated issue. At the end of April, the relevant government ministers in New Zealand and Australia announced a joint decision to launch a full market investigation into trans-Tasman mobile roaming. The decision follows the release of a discussion paper last year, which used information provided by mobile operators to benchmark wholesale trans-Tasman roaming prices against estimated competitive wholesale prices (based on national roaming services, mobile virtual network operator prices and the most recent cost estimates from the Body of European Regulators for Electronic Communications (BEREC)). The paper concluded that for Australians and New Zealanders roaming across the Tasman, the transparency of prices was inadequate and the prices offered were relatively high.

Naturally, a number of parties were interested in the findings from the discussion document, and it drew a number of responses. Perhaps unsurprisingly, these fell broadly into two camps. The first, comprising individuals and user groups, were generally in agreement with the paper, in particular that roaming charges between the two countries were indeed too high, and that this adversely affected consumers. Mobile operators, on the other hand, disputed the high charges, arguing that the impact of market forces ensured that consumers benefitted from reduced prices both for mobile roaming services and across a bundle of mobile services (although one New Zealand mobile operator did acknowledge that prices charged by Australian operators to customers roaming in New Zealand did in fact, appear high).

Elements of the benchmarking came under fire from some of the operators, mainly around the bundles used and the decision around some of the benchmarking comparators, such as the rates against which Australian and New Zealand rates were compared, and the way in which prices were converted to a single currency.

This push back is not surprising. Any benchmarking approach will often draw criticism from one of more parties, especially when an outcome does not favour them. As a leading expert on telecommunications tariffs research and analysis, Teligen is heavily involved in the development and application of benchmarking methodologies on a regular basis, both within its standard services and as part of bespoke studies for clients. And issues such as these are all too familiar. This doesn't mean, however, that objections such as these should be dismissed. On the contrary, such criticism is important, in that it demonstrates that all interested parties are actively involved in shaping the methodologies and ensuring that they deliver as balanced a result as possible. Failure to achieve this will ultimately undermine the outcome credibility of any benchmarking exercise. The playing field will never be truly even, of course, because no two countries are identical. Each country's start point is different, and each will be faced with different political, economic and geographical constraints. What is important is how these differences are accounted for in any comparison, as the respective governments in Australia and New Zealand are no doubt dealing with at the moment.