Europe’s mobile internet divide is widening – Digital Fuel Monitor 3rd release, 1H-2015
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Welcome to the third release (launched on the 21st of May 2015) of Digital Fuel Monitor, Rewheel's premium subscription service monitoring and analysing competitiveness of mobile internet access in EU and OECD countries, a must have resource for market insight, strategy, pricing and regulatory teams navigating through the mobile data transformation.

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» 1H-2015 release highlights (7 pages, pdf)

We are extremely proud that since our first release in March 2014 the premium DFMonitor subscription has become a strategic resource for many leading operator groups, telecom regulators, competition authorities and various players of the digital economy and mobile cloud and IoT ecosystem in Europe and the US. The telecom and tech investor community also shows a great interest in our research - DFMonitor data has been cited in many investor presentations.

"[Rewheel] Research shows that users pay up to ten times more to use their smartphones in those Member States where there is no challenger to the big European operators" - Joaquín Almunia, Vice President of the European Commission responsible for Competition Policy

Research notes
» Browse the research note list

Click above to browse through the over thirty premium research notes we released so far. The main theme of our research notes during the last two years has been the divergence of mobile internet access competitiveness among European markets and as well between competitive European markets (e.g. Nordics) and the US. We have released numerous premium and public research notes covering the adverse impact of telecom consolidation (4 to 3 mobile consolidation in particular), the telco strategic interests that fuel the 100 times difference in the price of mobile internet access gigabytes (i.e. net neutrality and zero-rating), zero-rating details per operator in all EU28 and OECD markets and the effectiveness of adopted or proposed net neutrality rules across the Atlantic.

Over 100 times difference in gigabyte prices and included gigabyte volumes among EU28 countries
So what is new in the 1H-2015? The abnormal competitiveness pattern that Rewheel first exposed in early 2013 (see FT article here, Reuters article here) has not changed. There are now even more striking competitiveness differences among the EU28 countries. While in Germany, Belgium and many other countries consumers run out of their 0.5 or 1 gigabyte monthly volume allowance after watching an hour of mobile video in the Nordics consumers get tens of 4G gigabytes at affordable prices (€15 – €35) and enjoy worriless consumption of video and cloud services over their smartphones or laptops (hotspot/tethering functionality included on smartphone tariffs).
On the EU-OECD competitiveness overview page premium DFMonitor subscribers can explore the gigabyte allowances for a wide range of price baskets, and freely select to include in the comparison the operator main brands, as in the chart above, the operators discount brands and independent MVNOs.
Widening EU mobile internet divide
The most remarkable new observation that we can make, having over a year of historic data behind us, is that the gap between the competitive and protected/consolidated European markets is not closing, but is actually widening. While the average gigabytes that €35 can buy stayed flat at around 2 in the German, Italian, Spanish, Belgian, Austrian and Portuguese protected/consolidated markets, in the Nordics & Baltics they doubled every year and reached 19 gigabytes in 1H-2015.
Unsurprisingly restrictive volume caps appear to heavily constrain mobile data consumption in Europe’s protected/consolidated markets. The gap in the average mobile data consumption per capita between Finland and Germany is widening and reached 13 times in 2014.

"Even though LTE rollout has begun, the Bundesnetzagentur is increasingly being contacted by consumers regretting that the speeds and data volumes of the services currently offered in the market do not always match their needs" - German telecom regulatory authority, 2015.

The amount of valuable radio spectrum capacity that is getting wasted in Germany and other protected/consolidated markets and the reluctance of the European Commission and the relevant national telecom regulatory authorities to act is incomprehensible.

Net neutrality, zero-rating and mobile internet prices: the missing link
The 100 times gigabyte price (or conversely volume allowance) differences among EU28-OECD countries can neither be credibly explained by differences in the underlying cost level of mobile network capacity nor by differences in the competitive intensity of national markets.

Rewheel has shown that the massive differences in the price of mobile internet access gigabytes across Europe is driven by the aspiration of many incumbent telecom groups to vertically integrate access with content/services and grab a share of the lucrative online video and cloud markets through price discrimination. Incumbent telecom operators have a fundamental conflict of interest in selling both open internet access and as well their own or their selected partners’ online video and cloud services. If zero-rating is allowed telecom operators have an incentive to favour their own services by zero-rating the usage of their own services (selling gigabytes at zero cost) while collectively overpricing the gigabyte usage of all other internet services.

Our 4Q2014 comprehensive EU-OECD wide research on zero-rating (see premium DFMonitor research note, here) revealed that the Nordics and Baltics were among a handful of markets that were free of zero-rating during the 4Q2014 (Denmark was an exception). In protected markets e.g. Germany, Belgium, Greece, Hungary where €35 buys consumers 100 times less open internet access gigabytes than in the Nordics, Deutsche Telekom, Vodafone, Telefonica and Orange were zero-rating video, cloud and messaging applications. Deutsche Telekom in Germany zero-rates (gives away unlimited gigabytes at €0) its mobile TV service (main stream and adult TV channels) while charging consumers over €6 per gigabyte in average for open mobile internet access.

In the Netherlands, where zero-rating is banned, KPN, the incumbent telecom group, recently doubled (free of charge) the mobile internet volume caps on its unlimited minute & SMS smartphone plans to encourage a carefree usage of its online videos services (see DFMonitor research note, here).

Why is the DFMonitor methodology so powerful?
The most important competitiveness metric in this "mobile-first and cloud-first world" is the price of mobile internet access gigabytes: how much do consumers have to pay to watch mobile video or use cloud services worriless on their smartphones.

The DFMonitor methodology allows for the straightforward separation and reliable approximation of the price of incremental mobile internet access gigabytes in unlimited minute & SMS smartphone and data-only tariff plans. We apply linear regression line fitting to the raw data points (volumes plotted against prices) and separate the gigabyte price (slope of the linear trend line) and the base data traffic independent price (zero gigabyte price including the built-in minute & SMS allowance). This simple operation reveals the calculated average mobile internet usage (gigabyte) price charged by every operator.
Besides calculating the incremental gigabyte and base prices for each operator DFMonitor automatically calculates a variety of Euro (e.g. €25, €35, €60) and gigabyte (e.g. 1, 5, 10, 20, 50, 100) baskets. The Euro basket comparison directly highlights the amount of mobile internet access gigabytes included by each operator for a given (affordable) basket of Euros. Non-premium subscribers can try the interactive charts on the EU-OECD competitiveness overview and country and operator specific DFMonitor pages and analyse prices as of 1H-2014.

The DFMonitor methodology exposes:
  • » The huge price difference (100 times) of gigabytes among competitive and protected/consolidated markets
  • » The huge price difference (more than 100 times) of gigabytes among operators and operator groups
  • » The telcos’ potentially anti-competitive own zero-rated video and cloud services (open mobile internet gigabytes sold at €5-€10 while telco’s own zero-rated gigabytes sold at €0)
  • » The post merger price hikes in 4 to 3 consolidated markets
10GB-4G-€35 threshold based new competitiveness colour codes
In this 3rd release, 1H-2015, we introduced a new colour code for marking the competitiveness of countries and operator groups.

The 69 operator groups present in the European Union and OECD member countries have been labelled to two mutually exclusive clusters: the operator groups that did not meet the 10GB-4G-€35 competitiveness threshold in more than half of the countries where they are present (dark grey label) and the operator groups that did meet the 10GB-4G-€35 competitiveness threshold in at least half or more of the countries where they are present (orange label).

An operator (part of a group) met the 10GB-4G-€35 competitiveness threshold if its main brand sold a 4G smartphone tarrif with unlimited minutes & SMS and at least 10 gigabytes of mobile internet access volume for €35 or less.

Countries where at least one mobile network operator met the 10GB-4G-€35 competitiveness threshold have been labelled orange. Countries where no mobile operator met the 10GB-4G-€35 competitiveness threshold have been labelled dark grey.

A 10 gigabyte 4G smartphone plan allows several hours of video streaming and via tethering (WiFi mobile hotspot created by the smartphone) it can meet basic laptop, tablet internet connectivity needs too.

The EU28 countries that met the 10GB-4G-€35 competitiveness threshold were the Nordic and Baltic countries (Denmark, Finland, Sweden, Estonia, Lithuania and Latvia) and as well four other 4-player operator markets (France, Luxemburg, Poland and the UK). The 4 to 3 consolidated Austrian market was the only 3-player operator country that met the threshold. Even though prices have almost doubled in Austria after the merger (see free October 2013 research note, link) and Austria has fallen considerably behind in competitiveness in EU28 (see May 2014 premium research note, link) one operator still met the threshold. Israel’s 5-player operator market was the only non-EU OECD country that met the competitiveness threshold.

EU Member States meeting the 10GB-4G-€35 competitiveness threshold in 1H-2015
The interactive map below visualises the EU28 countries that meet the 10GB-4G-€35 competitiveness threshold. The chart presents additional information when the mouse is over a country or an operator group. When readers click on a country or an operator group they will be directed to the country or operator group page where they can explore data in more depth.
MVNOs are far from meeting the competitiveness threshold
Mobile Virtual Network Operators (MVNOs) have got a lot of attention recently. The European Commission has in 2012 (Austria) and in 2014 (Ireland and Germany) cleared 4 to 3 mobile mergers on the basis of MVNO wholesale access remedies. Many national competition and regulatory authorities and Rewheel have expressed serious objections regarding the effectiveness of the MVNO wholesale access remedy.

Rewheel has argued that under no circumstances an MVNO wholesale access remedy can create long lasting effective competitors and remove the competition concerns entirely in a 4 to 3 mobile consolidation (see the premium DFMonitor report here). The chart below compiled by using the 1H-2015 MVNO prices clearly illustrates this point.
Monitoring competitiveness from the Finnish perspective
The Digital Fuel Monitor service is managed by the Finnish boutique management consultancy Rewheel that specialises into advising European operators, investors and regulators on competition matters, mobile internet-centric business models, spectrum auctions and infrastructure investments.

Finland has the lowest mobile internet usage prices among EU28 and OECD countries, the highest mobile data consumption per capita (13 times higher than Germany's in 2014), the highest mobile broadband population penetration (2014) and the second highest end-user experienced mobile network speeds (September 2014). All mobile operators in Finland abide by strict net neutrality principles and none of them apply vertical price-discriminations such as zero-rating.

Despite the mass-affordable open mobile internet offers and very heavy mobile data traffic the Finnish telecom sector generates healthy returns for its investors (e.g. 16% ROCE reported by Elisa, the leading Finnish operator).

Why to purchase a premium DFMonitor subscription?
Digital Fuel Monitor is a must have resource for market insight, strategy, pricing and regulatory teams navigating through the mobile data transformation.

Premium DFMonitor subscribers get access to the full 1H-2015 prices data that includes 1,638 smartphone and data-only tariff plans offered in 41 countries from 137 operators and 71 MVNOs.

They can explore a wide range of "Euro" and "Gigabyte" baskets, the price per incremental gigabyte and base price metrics for both smartphone and data-only ("MBB") internet connectivity in all EU and OECD countries for all operators and all major MVNOs. All these metrics, along with penetration, mobile data consumption per capita and user-perceived speeds (as reported by Open Signal) can be compared across all EU and OECD countries (so including the US) on the EU-OECD competitiveness overview page. You can try how it works using the old 1H-2014 prices data.

In the country specific pages (one page for every EU and OECD country, see the boxes on the right hand side) it is possible to see the exact tariff points for each operator and compare different price competitiveness metrics (Euro basket, Gigabyte basket, price per incremental gigabyte, base price). MVNOs and operator sub-brands, 3G-only and 4G tariffs can be included/excluded from the analysis. Try how it works, using the old 1H-2014 prices, e.g. for the UK: » dfmonitor.eu/UK

It is also possible to compare different price competitiveness metrics of a selected operator group (one page for each operator group, see the left hand side of the page) across all its EU and OECD market footprint. MVNOs and operator sub-brands, 3G-only and 4G tariffs can be included/excluded from the analysis. Try how it works, using the old 1H-2014 prices, e.g. for the Vodafone group: » dfmonitor.eu/Vodafone

There is also an option to get access to the full excel database, including information about smartphone tethering (permitted or not), tariff speeds, VoIP restrictions, zero-rating (have been and planned to be covered by in-depth premium research notes) and all the operator website screen shots.

Constant feed of timely premium research notes with unique and thought provoking insights

Research notes
» Browse the research note list

Premium subscribers get full access to all existing DFMonitor and Rewheel premium research notes and reports and will start receiving the feed of fresh premium research notes (over 30 released since March 2014, key themes: price competitiveness, market consolidation, new entrant/challenger operators, net neutrality, zero rating, MVNOs’ role in the mobile data era, EU Telecom Single Market, data roaming, mobile data consumption patterns, spectrum use).

For further subscription terms visit the Premium subscription page (link).

Since the launch in March 2014 many operator groups, authorities and global internet companies and players of the emerging mobile cloud and IoT ecosystem have purchased the premium subscription and our charts and findings are often cited in investor presentation materials. For the list of media coverage see the right hand side of this page (on the top).

If you or your organisation can’t yet make the decision to subscribe just leave us your email address (send a short email to contact@dfmonitor.eu) and we will keep you posted on the highlights of the upcoming research notes (typically on a weekly or bi-weekly regularity) and new releases (two main DFMonitor releases per year) - it is free.

Keep reading
We offer plenty of information and insights free of charge, so keep reading even if buying a premium DFMonitor subscription is not an option for your organisation at the moment.

You can download the key highlights of the 1H-2015 release in printable pdf format below:

Free download
» 1H-2015 release highlights (7 pages, pdf)

» EU-OECD competitiveness overview - full of interactive competitiveness charts (link)

» Each EU and OECD country has its separate DFMonitor page (e.g. Germany: dfmonitor.eu/DE)

» And each operator group too (e.g. Germany: dfmonitor.eu/DeutscheTelekom)

Research notes
» Browse the research note list

Your organisation is not yet a premium DFMonitor subscriber but you would like to receive e-mail updates about new research notes? Drop us an e-mail (contact@dfmonitor.eu) and we will put you on our distribution list (several e-mails a month).

We are quite active on Twitter, so if you want to get first hand information on new developments on hot mobile internet topics like mobile market consolidation, net neutrality then follow us at @dfmonitor.
EU's first 700 MHz spectrum auction
Response to Telefonica's criticism
DFMonitor in the media
Reducing Wireless Competition in Europe
The New York Times (editorial)
Further media appearances
MNO consolidation in Germany, lessons learned in the Austrian merger
ECTA Regulatory Conference 2013, Brussels
[December 2013]
Mobile merger increases prices in Austria
Handelsblatt
[September 2013]
EU27 cost disparities
ECTA Conference 'Single Market for Telecoms', Brussels
[June 2013]
An open letter to the Minister of Development of Greece
Ekathimerini, in Greek
[March 2013]
Finland's leading financial newspaper, has selected Rewheel as the 3rd most successful consulting firm in Finland.
Kauppalehti, full interview in the February 5th printed edition
[February 2013]
Top 1% of Mobile Users Consume Half of World’s Bandwidth
The New York Times / International Herald Tribune
[January 2012]
Chairing and network economics workshop
IIR Mobile Data Offloading Conference, Berlin
[June 2011]
Timelines For LTE in Turkey
Eurasia Com 2011
[January 2011]
Telecoms Cost Allocation & Profitability Analysis Conference
IIR Conference, London
[September 2010]
Opening analyst note and Data pricing strategy workshop at
Mobile Broadband World 2010, London
[September 2010]
Nokia's wireless modem business has been hurt by Chinese competition
The New York Times / International Herald Tribune
[July 2010]
Mobile data business case workshop
WiMAX Global Congress 2010, Amsterdam
[June 2010]
Reuters Factbox on LTE
Reuters
[February 2010]
TeliaSonera's LTE deal
Reuters
[January 2010]
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