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Supply-side strategies: from LTE to 5G - IDATE


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Presentations from the IDATE Digiworld Executive Breakfast Club on Monday 16 July

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Supply-side strategies: from LTE to 5G - IDATE

  1. 1. Wireless 4G & 5G Supply-side strategies: from LTE to 5G Using QoS and customisation to leverage new opportunities M18430MRA – June 2018 - Synthesis
  2. 2. Copyright IDATE DigiWorld 2017, CS 94167, 34092 Montpellier Cedex 5, France - All rights reserved. None of the contents of this publication may be reproduced, stored in a retrieval system or transmitted in any form, including electronically, without the prior written permission of IDATE. IDATE, DigiWorld, DigiWorld Institute and DigiWorld Yearbook are the international registered trademarks of IDATE. IDATE DigiWorld Research Programme: Innovative market watch More information: Isabel Jiménez, +33(0)467144404 – Digital Telcos Global tracking of key services, and insights challenges facing the FTTx & Gigabit Proud provider of 10 years of benchmark analysis for the global superfast access market. Wireless 4G & 5G After having launched one of the first LTE market watch services, we are looking ahead to 5G and its applications. Internet of Things A pioneer in M2M and IoT markets, today we are exploring how IoT will impact vertical sectors. Future TV & Video In this fast-changing market, we are using our unique expertise in TV to explain every facet of the OTT migration. DigiWorld Watch An annual watch service that provides a valuable addition to our five core market watches, giving you analyst briefings and expert reports on the latest news in emerging technologies & innovative strategies: NGN plans, Digital China, Video Game, Artificial Intelligence…
  3. 3. Executive summary
  4. 4. © IDATE DigiWorld 2017 – p. 4 How LTE plans have changed: shift in focus from data allowance to quality of service  Mobile data services are still largely structured by on data allowance, but high volume and unlimited plans are increasingly common.  Unlimited does not necessarily mean high-end: some target users with a small budget, providing a very slow connection.  Quality of service becoming central in structuring product lines – especially speed which my or may not be combined with data caps – as is content quality.  Certain applications being favoured through zero rating (traffic not deducted from the customer’s allowance). This can be a way to market unlimited plans and avoid fixed-mobile substitution.  Growing number of partnerships with OTT video services, rather than selling premium content plans, which are tending to wane. Main findings
  5. 5. Changes in LTE pricing strategies Shift in focus from data allowance to customised products that incorporate quality of service
  6. 6. © IDATE DigiWorld 2017 – p. 6 Data allowance still a central metric for tiering plans 0 10 20 30 40 50 < 100 Mb 100-500 Mb 500 Mb 1 Gb 1-2 Gb 2-5 Gb 5-10 Gb 10-50 Gb > 50 Gb Unlimited Real consumption Data cap Data traffic per plan and data cap (Gb per month) Source: Ericsson, app Annie data, Developed Countries, July 2017 0% 5% 10% 15% 20% 25% 30% 35% < 100 Mb 100-500 Mb 500 Mb 1 Gb 1-2 Gb 2-5 Gb 5-10 Gb 10-50 Gb > 50 Gb Unlimited Distribution of mobile data plans  The need for a broad product line, including low-cost plans for light users  Plans with a small data allowance are typically not enough, and subscribers will be encouraged to upgrade  Whereas customers with large data allowances rarely consume their maximum.
  7. 7. © IDATE DigiWorld 2017 – p. 7 Unlimited plans on the rise • VERIZON • T-MOBILE USA, GERMANY, CROATIA, NETHERLANDS • TELE2 SWEDEN, LATVIA, NETHERLANDS, CROATIA • FREE FRANCE • TIM • SUNRISE SWITZERLAND • NET 1 DENMARK • TELENOR HUNGARY • ELISA FINLAND • TELIA FINLAND • 3 UK • 3 IRELAND • SWISSCOM, SALT • DNA FINLAND 2017 2011-2015 2007  A growing number of rollouts, employing multiple strategies to protect the network: – Zero rating for some applications, to avoid fixed-mobile substitution – Price: 80 EUR for T-Mobile in Germany, for instance – Structuring product line by speed – And especially enforcing fair use policies. Launch cycle for unlimited plans UNLIMITED OFFERINGS LAUNCH CYCLE Plans advertised as "unlimited" – with a cap of over 30 Gb a month Source: IDATE DigiWorld, Supply-side strategies: from LTE to 5G, June 2018
  8. 8. © IDATE DigiWorld 2017 – p. 8 Underlyling trend: structurating product lines by speed  Speed-based pricing can take several forms: – As the key metric in tiering a product line (Swisscom), – Combined with volume-based billing (A1 in Austria) or content (AT&T, Verizon).  It enables increasing degrees of customisation based on consumption and user profiles Product lines tiered by speed 100-299 MBPS50-99 MBPS30-49 MBPS >300 MBPS10-29 MBPS0-9 MBPS T-MOBILE AT SWISSCOM ELISA TELIA FIN VODAFONE DE DL BITRATE RANGE VODAFONE DE BITRATE ONLY BITRATE X VOLUME BITRATE X CONTENT VERIZON AT&T ELISA SWISSCOM A1 TELIA FIN 3 AT RANGE SEGMENTATION Source: IDATE DigiWorld, Supply-side strategies: from LTE to 5G, June 2018
  9. 9. © IDATE DigiWorld 2017 – p. 9 Growing number of high-volume plans that incorporate quality of service  A host of plans with allowances of more than 20 Gb  Product lines that combine speed and volume  And even some structured only by speed, offering unlimited data. Highest Volume, for Smartphone, postpaid, SIM only offerings UK & Germany Finland UKFrance BitrateVolumeVolumexBitrate Drei Austria Deutschland USA Austria Sweden & Netherlands Finland Finland Germany & Netherlands Unlimited> 40 Gb20-40 Gb VOLUME OF DATA RANGE SEGMENTATION Source: IDATE DigiWorld, Supply-side strategies: from LTE to 5G, June 2018
  10. 10. © IDATE DigiWorld 2017 – p. 10 Onset of discrimination between content  Very few operators incorporate content into their plans: either premium content offered by operators that own the rights to it via a subsidiary AT&T), or free OTT plans (Netflix free for a year with Vodafone UK for instance).  We are starting to see different pricing based on the type of application: – Zero rating (traffic not deducted) for chat, social media, music or video apps. – Differentiation between content quality and the speed provided for their distribution Mobile operators’ content strategies CONTENT DISCRIMINATION TIM VODAFONE ITALY VODAFONE UK 3 UK T-MOBILE GERMANY VODAFONE GERMANY ZERO RATINGAT&T SFR VODAFONE SPAIN ORANGE FRANCE LG U+ OWN CONTENT (or via subsidiary) T-MOBILE US SPRINT VODAFONE UK EE UK OTT PARTNERSHIP AT&T VERIZON 3 UK DEFINITION (SD / HD) CONTENT OWNERSHIP Source: IDATE DigiWorld, Supply-side strategies: from LTE to 5G, June 2018