News

Telecom pricing

30/03/2010
Benchmark of retail pricing for Internet and mobile services in Europe and the United States
Telecom Retail Pricing


Analysing and comparing telecom prices is both a complex and sensitive subject, involving many and varied parameters. To help better our understanding of these parameters and the impact they have on pricing, IDATE has produced a detailed report on the leading fixed broadband access and mobile service providers’ pricing schemes in the major European markets (France, Germany, Italy, Spain and the UK) and in the United States, drawing on an exclusive database compiled by IDATE.

Mobiles
Market positioning and pricing
As for the range of prices charged for mobile services, we observe significant differences between the various markets:
• in the UK, Germany and France, a wide range of solutions is available, targeting a variety of users,
• the selection is more narrow in Italy, while Spain is somewhere between these two extremes,
• finally, in the United States, high volume offers are widely available and have a very concrete impact on the price of light and average consumption baskets.
The terms that apply to on-net/off-net and peak/off-peak calling hours for mobile users are still very distinct, even though the growing shift to flat rates is tempering this to some degree. Mobile data service prices, meanwhile, still vary a great deal, both in terms of the volume included and the way they are capped (in some cases “playing” on access speed).

Sales and billing methods
The main terms and conditions attached to operators’ offers, which are just as varied as prices, include:
• purchasing options: in a shop vs. online, packaged offers versus SIM card only,
• minimum contract lengths: minimum contract length for post-paid offers, validity periods for prepaid cards,
• fixed or minimum costs: subscriptions and minimum monthly contract length, prepaid card top up,
• billing principles for voice calls: how call time is measured, differentiation by call destination, peak/off-peak calling distinction,
• billing principles for text messages: differentiation by destination number, according to the type and size of the message, peak/off-peak calling distinction,
• billing principles for mobile Internet use: how consumption is measured (by volume, time, per-connection).

Mobile pricing benchmark (analysis by consumption basket)
We have calculated the price of baskets for different consumption profiles, based on post-paid offers. British operators appear to market the most affordable offers in all cases. German and Spanish carriers, meanwhile, while offering average prices for light users, are regularly among the most expensive for mid-range and heavy users. French and Italian telcos are situated between these two extremes, although we find much greater variations in price in Italy. And, finally, in the United States offers appear to be particularly expensive for light consumers, but become steadily more affordable for heavier users.

Broadband access
Market positioning and pricing
When it comes to fixed broadband access services, American telcos appear to market a greater selection of standalone access solutions that their European counterparts who are more focused on bundled offers, no doubt to some extent because of the difference in how the telephony and TV markets and market competition are structured on either side of the Atlantic.
In terms of pricing, the gradual shift to ultra-fast broadband is generally taking place without a marked increase in price over classic broadband offers. In some countries, and particularly France for most operators, prices are actually identical.

Sales and billing methods
For fixed broadband access offers, the various options are built chiefly around:
• point of purchase: in a shop or online;
• terms governing handset rental/purchasing and its amortisation, replacement, return, etc.;
• minimum contract lengths;
• how access is billed: according to access speed, depending on other services in the bundle, etc.;
• billing principles for voice calls: how call time is measured, peak/off-peak calling distinction, differentiation by call destination;
• how TV services are billed.
The report includes a comparison of all of the different options in the different schemes, drawing on examples from the database.

Broadband access pricing benchmark (analysis by consumption basket)
For broadband prices, it is German, French and British telcos that often offer the lowest prices, while prices in Spain and Italy are usually among the highest. Meanwhile, aside from broadband only offers running at up to 8 Mbps, American carriers systematically charge the most of any of the operators examined here.

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Telecom pricing – broadband and mobile market benchmark (Market & Data, March 2010)
• The purpose of this report is, first, to offer details and a comparison of the main features of the pricing systems applied these services in terms of market positioning (breadth of range, access speed) – drawing on the rate plans offered by the leading operators (generally the top four in each category) in six countries: Germany, Spain, France, Italy, the UK and the United States, which corresponds to more than 500 offers for the 42 vendors analyzed.
• Second, we have performed a detailed analysis of the “technical” components of these pricing plans, in other words of all of the parameters used in the pricing schemes, from the terms of subscription to contract length, by way of all of the methods used to calculate time or volume, depending on the case.
• Five mobile services and three broadband access consumption baskets have been defined. For each basket, which have measured the lowest price offered by each operator then provided the results for each country with three benchmarks: the lowest point, which indicates the price charged by the operator with the cheapest offer, all operators combined; the high point, which indicates the price charged by the operator with the most expensive offer (but the least expensive one for the operator in question for the profile being examined) and, finally, an intermediate point that corresponds to the weighted average (based on market share) of the prices charged by the three or four operators selected for that country.
• Finally, we have established pricing tables according to the different baskets. Unlike other benchmarking exercises that are generally carried out on this topic, we have endeavoured to take the utmost account, especially for services that are billed based on time (chiefly mobile calling), of the breakdown of calls that include adjustment coefficients according to time credits and billing tiers, and to provide more detailed points of reference than just an average price or the lowest price for a given country.
• A database of prices, in the form of an Excel file, backs up our analyses and forms an integral part of this report.