mbo - pricing

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Strategy Analytics Webinar:Keeping Pace with Mobile Broadband

Pricing Innovations and Trends

12 October 2011

Josie Sephton, Senior Consultant, [email protected]

Susan Welsh de Grimaldo, Director,

Mobile Broadband Opportunities (MBO)

[email protected]


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Agenda

Introduction Tracking Tariffs: Teligen Tariff Benchmarking, Comparing Pricing

The Trends in Tariffs:

Tiered Plans and Managing Data Caps

SIM-Only Plans for Mobile Broadband Modems/PCs

Emerging LTE Pricing Models

Driving Tablet Connections with Multi-Device Shared Data

Plans

Social Networking and other Content Specific Plans, Time-

Based Plans

Conclusions

Questions & Answers2


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Help Me Develop

Strategy Analytics Overview 3

Strategy Analytics: Working with

Global Leaders to Address Your Needs

Help Me Understand

Help Me Analyze


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4

Mobile Broadband Opportunities

A Strategic Advisory Service

Mobile Broadband Opportunities (MBO)analyzes how to grow a profitable mobile

broadband business

Pricing and Go-to-Market

Best practices,innovations inpricing mobile

broadband

Data plans to driveuptake of newdevices, upgradesto 3G and 4G

Managing DataTraffic

Mapping theecosystem ofsolutions

Best in classsolutions, vendoroverview, casestudies

Driving toProfitability

Moving frombandwidthmanagement to

monetization ofdata traffic

Delivering profitablemobile video


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An introduction to Teligen

Pricing and

benchmarking

division of Strategy

Analytics

Providing a range ofdatabase and

benchmarking

systems, plus

customised tools and

consultancy services

Established track

record with

regulatory bodies

and service providers

around the worldAccess to extensivedatabases of pricing

information

Benchmarked output using

internationally recognised

methodologies


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Mobile Broadband Price Benchmarking

Spreadsheet-based system covering mobile broadband pricing for

PCs and tablets, updated quarterly

Includes information from 113 network providers in 33 countries

Tariff information include details on fixed and variable charges,

and the application of allowances and price ceilings

Price benchmarking capabilities with usage baskets, taking into

account usage ceilings where imposed Ability to create customised baskets

VAT on/off and currency selection options

Compare end user costs between different offers, including the

differences in allowances and overage traffic prices


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Tracking Tariffs

Teligen Tariff

Benchmarking


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A Rapid Evolution of Mobile Broadband

Plans for PCs, Modems, Tablets (1)

8

Currently cover over 2600

plans from 113 providers

globally Average 23 plans per provider

Number of offerings

increased by 10% since June

Plans continually changing,evolving

20-30% per quarter

Some very clear trends evident

Source: Mobile Broadband Price Benchmarking September 2011, Teligen


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Simple plans - tieredpricing, some

unlimited

Plans with

PCs

Plans withTablets

Plans with SIMonly, Plans withWiFi hotspots

Bundled services(voice, multi-SIM)

9

A Rapid Evolution of Mobile Broadband

Plans for PCs, Modems, Tablets (2)


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Mobile Broadband

Plans for PCs, Modems, Tablets

Cross country comparison (low usage)

Based on low usage basket

of 300 MB/2 hours usage

per month

Shows monthly cost user

would pay based on usage

specified

Results presented in USD,

PPP, to allow for fairer

cross-country comparison

Lower usage baskets

attract more volume-basedusage charges

10

USD PPP/month, inc VAT



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Mobile Broadband

Plans for PCs, Modems, Tablets

Cross country comparison (high usage)

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Based on high usage basket

of GB/30 hours usage per

month

Shows monthly cost user

would pay based on usage

specified Results presented in USD,

PPP, to allow for fairer

cross-country comparison

For higher usage baskets,

much flatter pricing,

though not exclusive, ismore evident


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The difference volume makes

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In-countrynot always an even playing field

13Source: Mobile Broadband Price Benchmarking September 2011, Teligen

Basket: 1 GB/5 hours, 15 days per month


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Tiered Pricing forMobile Data

M bil B db d E l i


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Mobile Broadband Evolution:

Shift from Unlimited Data to Tiered Plans,

New Pricing To Drive Subscriptions on Tablets, New Devices

Unlimited data plans forsmartphones and

modems

Heavy modem use

Limited view of types oftraffic on networks

Data Caps and Price Tiersimplemented as data traffic

growth impacts networkperformance

OTT on smartphones,tethering

Policy control to limit abuse,throttle when caps reached

Targeted segments

Video traffic challenge

Multi-SIM plans toshare data allocation on

multiple devicesShared Family Data

plans likely (US)

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2010-mid-20112009 Mid 2011-12

Strategy Analytics, 2011


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Tiered Data Plans with Usage Caps:

Incremental Overage Charges Out, Messages to User In

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

If you have/had a data plan with a usage limit, which options appeal to you for when you reach

your data limit? (select all that apply)

Only want unlimited data

Throttle speed

Buy a bucket of MB or GB

Pay per KB or MB

Receive a message before

limit reached

Strategy Analytics

Source: Strategy Analytics Smartphone Owners Survey, US

Results, Jan 2011

Many operators who moved to data caps on tiered plans are communicating on-device

with the user and moved from incremental per KB pricing to throttling or refill buckets,

trends that line up well with consumer preferences


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Tiered Data Plans are the Norm

but what happens at the cap threshold?

Virtually all mobilebroadband plans

come with limits -

even unlimited

ones.

Overage charges andthrottling are by far

most common

approaches used

Typical overage

charge is measure

per Mbyte Higher volume plans

more likely to have

bigger overage units



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Examples of approaches post data threshold

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What happens after data allowance?

Graphic presentation showing what

happens to end user costs once

allowance used up

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Belgium, Proximus

Data allowance is 1GB

After 1GB, overage charges are applied,

and, for this plan, costs rise steeply

Chile, Claro

Data allowance is 0.7GB

After 0.7GB, service stops unless plan is

refreshedSource: Mobile Broadband Price Benchmarking September 2011, Teligen


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WiFi Hotspot Access Bundled in Data Plans to

Supplement Mobile Data Caps, Offload Traffic

WiFi hotspots for mobile broadband plans are increasingly being introducedinto packages

Present in around 16% of packages covered

Used by providers in Denmark, France, Ireland, Norway, Poland, UK, US and others

Provide useful traffic offload for operators

and support external marketing efforts, as are a benefit to users

Coverage issues

Data volumes


Note: Prices shown in local currency


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SIM-Only Pricing for MobileBroadband Modems/PCs


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The growth of SIM-only

Predominant trend this quarter 497 SIM only offers across 2631 plans almost 20%

Some providers, countries more disposed to SIM-only Optus, Australia: 62 out of 134 packages SIM-only

45 package prepaid. 13 SIM-only business specific packages also included Vodafone, Australia: 26 out of 48 packages SIM-only

Orange, Poland: 21 out of 82 packages

While others, arent AT&T, US: 3 out of 21 SIM-only

Verizon, US: 4 out of 27 SIM-only

Plans not restricted to consumers E.g. Optus BYO business plans, 28.8 Mb/s download, 2-16 GB data allowance,

A$25-85/month

Numbers alone dont reveal underlying dynamics 22


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Poland: a case study

SIM-only plans are growing rapidly All 4 operators recently introduced SIM-only, or have greatly expanded range of offers

E.g. Orange, Poland had 8 SIM-only plans in June 2011. It now has 21

Key features Month-to-month billing Some plans are cheaper per month than device-based plans, or offer higher monthly

allowances

Allow users to easily change plan and/or operator, based on needs and available prices

High cost of equipment in Poland likely deterrent to plan sign-up

And low cost in neighbouring Germany encourage people to import kit independent ofoperator

SIM-only plans key in getting user buying and using bandwidth from

operators And all providers need to be on the same page

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LTE Retail Market and PricingApproaches

Examples from

Commercially Deployed

LTE Networks


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The emergence of 4G

Plans predominantly in the US But other countries rapidly rolling out offers

Austria, Denmark, Estonia, Japan, Norway, Poland, Sweden all

offer a range of 4G broadband plans

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Examples of Pricing for 4G LTE Data

Services on Modems

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Offers LTE modem FlexPlan - starts user at entry level and

automatically bumps them to next tier when data cap reached Unlimited social networking to 7 sites

Promotion of two free months of service

RogersWireless

Special introductory offer for heavy modem users: the maximum

monthly charge for unlimited data using Xi Data Plan Ninen will be

4,935 yen (including tax) through April 2012

NTT DoCoMo

Overage fees same as 3G: KRW 0.025 per packet (KRW 51.2 per MB) Two initial LTE Modem plans:

LTE Modem 35 (KRW 35,000 per month, 5GB data limit)

LTE Modem 49 (KRW 49,000 per month, 9GB data limit)

SK Telecom

LTE Modem service on its premium brand 1O1O:

HK $249/1GB, 349/5B (with HK$99/GB overage), HK$459/unlimited

Two LTE speed tiers on its one2free value brand:

HK$187/1GB, $287/5 GB ($99/GB overage), $387/unlimited on the

full speed Extreme plan

HK$87/ 1GB, $187/5GB, $287/unlimited on Excite plan with speed

cap at 7 Mbps down

CSL

Hong Kong


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Telia SwedenSets LTE Prices at 2x 3G, Offers Speed Tiers By Data Level

Telia Sweden offers tiered plans for LTE with different levels of speed

promises combined with increasing buckets of data. Basic plan focuses on faster surfing (the entry level mobile broadband plans are 3G) and

includes free WiFi hotspot use

Mid-level LTE plan focuses on large file downloads and video streaming (comparable

Intermediate 3G plan is marketed for movies and music)

Premium plan is billed as the best mobile broadband in the world

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LTE Basic LTE Mid-Level LTE Premium

Intermediate 4G: 319/kr

Surf twice as fastwith 4G.

Surfing for 10 GB / month

5-10 Mbit / s speed promise.

Large 4G: 319/kr

Download large files and watch alot of TV over the Web.


10-20 Mbit / s speed promises

Total 4G: 499/kr

For those who only settle for the bestmobile broadband in the world.


10-80 Mbit / s speed promises.

(Source: Telia.se website 8 July 2011)


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MetroPCSNew Use Case for 4G Streaming Video/Audio on Handsets

MetroPCS (US) LTE Handset Plans - Video On Demand as Premium Play MetroPCS leapfrogged from 2.5G to 4G LTE, using 5 MHz, focusing on handsets only (no

USB modems)

January 2011, MetroPCS announced entry tier plan with unlimited MetroWEB but

limited streaming to YouTube; mid-tier added navigation plus streaming over WiFi ;

premium plan included unlimited data & streaming/downloads plus premium content

Early July 2011 plans shifted away from mentioning specific access to YouTube to

include unlimited MetroWEB browsing but capped streaming and downloads on entry

and mid-level plans

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Plan Included Multimedia

Streaming andDownloads

Unlimited

MetroWEB

Navigation Video on

Demand

$40 100 MB

$50 1 GB

$60 Unlimited


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Multi-Device Plans


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Multi-Device Plans: Operators Aim to Drive Tablet,

Modem Uptake with Bundled Plans

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Bundle Fixed Broadband with Mobile Broadbandfor a discount (Czech O2, Telekom Austria)

Use a smartphone, tablet or portable WiFi hotspotto tether other devices with WiFi; 3G or 4G worksas connection to network

Bundle or Tether

Discount/add on a tablet or modem for existingmobile customers (Orange, T-Mobile UK forbusiness)

Get a SIM-Only at discount price to add modem ortablet to existing mobile broadband plan (Tele2Sweden)

Tablet or SIM-OnlyAdd-on

Multi-SIM plans share a data allocation acrossmultiple devices

Rogers Wireless, Bell Mobility (Canada), OrangesMobistar (Belgium) 2-5 devices (extra fee mayapply)

Business/SOHO plans: Proximus (Belgium);

Telefnicas Movistar (Spain)

Multi-SIM

Strategy Analytics, 2011

A Single, Shared Data Plan for Multiple Devices


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A Single, Shared Data Plan for Multiple Devices

is More Appealing to Consumers than

Tethering or Mobile WiFi Routers (Portable Hotspot)

Nearly 60% interest in multi-device data plans (multiple devices share data allocation

on one plan) among smartphone owners points to a strong opportunity for mobileoperators as more consumers adopt additional devices

Healthy interest in MiFi-type devices (portable 3G or 4G WiFi hotspot router) and

Tethering through a smartphone, though consumers would prefer embedded mobile

data with a shared data plan for their devices

31 Strategy Analytics, 2011

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

A separate mobile WiFi hotspot

To use mobile phone to connect all my CE devices

A single data plan across all my devices

For connecting my consumer electronics (e.g., phone, modem,PC, tablet) devices I would like...

Strongly Agree Somewhat Agree Neither Agree or Disagree Somewhat Disagree Strongly Disagree

Source: Strategy Analytics Smartphone Owner Survey, January-February 2011

(US, France, Germany, Spain, UK, China)


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Other New Approachesto Mobile Broadband Pricingto Drive Uptake


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Consumers Interested in New Mobile

Broadband Pricing Models

Data only plans for smartphones, night/weekend plans, content-

specific plans would resonate with consumers

How Interested Are You in the Following Pricing Options?

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Monthly unlimited text/chat/email (no voice minutes)

data plan for nights/weekends only

pay for an hour or day of data

pay for content upload/download

unlimited access to social network or favorite websites

Not at All Interested Somewhat Disinterested Neutral Somewhat Interested Very Interested

Source: Strategy Analytics, January 2011, US results

Strategy Analytics


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Content specific plansSocial Networking in Colombia

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Telefnicas Movistar in Colombia offers a

range of data packages, including a socialnetworking package, a full Internet navigation

package, and cheaper mail and chat options

with no browsing

Telefnica usesDPI to zero-

rate traffic to

specific urls for

Social

Networking

sites; users canalso access

permitted sites

through on-

phone apps.


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Off-Peak Plans Seek to Monetize Available

Capacity When Networks not Congested

In the UK, several operators offer extra bucket of data for use

during off-peak quiet time T-Mobile UK - 1GB monthly data transfer limit, plus a further 1GB allowance to

use during "quiet time" (00:00 - 10:00), then possible speed reduction.

Orange UK - 1GB anytime monthly data transfer limit, plus 1GB "quiet time"

(midnight to 4pm), then 0.05/MB. Unlimited public WiFi with BT Openzone.

Some operators offering weekend only or evening only plans Sky Link (Russia) offers highly differentiated data plans, based on time of day,

hourly volumes, protocol or specific web sites.

Off-peak pricing aims to extract morevalue, attract new customer segments


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Conclusions

Market has moved from one, unlimited data plan to tiered plans; evenunlimited plans may throttle use after a set data limit

Use of WiFi hotspots bundled in with mobile data to supplement capped data

amounts

SIM-only data plans for PCs/tablets are growing rapidly

Big increase over past 3 months, and already account for around 20% of total plans

SIM-only plans key in getting user buying and using bandwidth from operators

A variety of LTE pricing models for modems and handsets emerging

Multi-SIM plans emerging in more markets to drive tablet plan activation

Other pricing models, such as social networking and off-peak, aim to drive

data uptake in new user segments/entry tiers

Strategy Analytics anticipates more user segmentation and pricing innovation,

including flexible plans and content bundling as the mobile broadband market

further matures, LTE enables additional services, and operators implement

network solutions/intelligence that enable new pricing models36


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Questions & Answers

Josie Sephton, Senior Consultant, [email protected]

Susan Welsh de Grimaldo, Director,

Mobile Broadband Opportunities (MBO)

l hd i ld @ t t l ti

mbo - pricing

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