Lowest prices and highest mobile broadband user penetration was observed in those countries where at least one independent challenger MNO was present

The lack of an ‘independent challenger‘ operator in any of the EU’s 27 member states can push local smartphones tariffs up by as much as a factor of ten, according to research carried out in December 2012.

According to a study of smartphone tariffs from the 92 mobile network operators across the EU27 member states, the lowest prices and highest mobile broadband user penetration was observed in those countries where at least one independent challenger MNO was present, for example Sweden and Finland, or among poorer member states including Estonia, Latvia, Lithuania or Poland.

Helsinki based consultancy Rewheel carried out the study, which targeted smartphone tariffs that included as a minimum 2GB of data and 200 off-net national minutes per month. The price of such offerings across the EU ranged between €8 and a staggering €78 a month.

The lowest available prices in the 13 most “protected” markets (those with no challenger), were on average 140 per cent higher than in the rest of the EU. Many of these markets also had one or more of the active MNOs belonging to the “E5 Group” (Vodafone, Deutsche Telekom, France Telecom, Telefonica and Telecom Italia).

In fact, E5 Group MNOs do not drive price competition in markets where they are the challenger number three or four operators, pricing at the same uncompetitive level (more than €40) both when they are the market incumbent (first or second placed) or the market challenger.

Meanwhile, the lowest available prices in those 15 member states which had only two or three MNOs were 46 per cent higher than in the 12 markets which had four active MNOs. Independent challenger MNOs price on average below €20, the survey found.

Moreover, in countries where prices are up to seven times higher – paradoxically mostly EU’s poorer newest member states – penetration of active mobile broadband users is noticeably lower, found the study.

Of concern is the prediction that further operator consolidation in Europe would most likely result in higher prices for consumers as the lowest available price in member states where only three MNOs are present is 46 per cent higher than in member states having four MNOs.

And protective pricing harms EU mobile internet adoption, with the penetration of active mobile broadband users in member states where an independent challenger is present, is on average 34 per cent higher than in member states where only incumbents and/or E5 Group members are present.

“The digital transformation of economies and societies is one of the main drivers of economic recovery of the European Union. Smartphones represent the personal vehicles and their tariff plans the fuel of this transformation. But while in the member states with most progressive mobile markets an average citizen can use its smartphone for less than one per cent of its net wage income, in the poorest member states it would need to pay as much as 10-17 per cent, which is clearly unaffordable for the masses,” said Antonios Drossos, Rewheel’s managing partner.

“It is our conviction that unless European and member state authorities take the necessary corrective measures poorer member states, which are mostly affected, will underperform their wealthier peers in digital and overall economic competitiveness and growth.”

Lack of independent challengers keep EU mobile pricey

The lack of an ‘independent challenger‘ operator in any of the EU’s 27 member states can push local smartphones tariffs up by as much as a factor of ten, according to research carried out in December 2012.

According to a study of smartphone tariffs from the 92 mobile network operators across the EU27 member states, the lowest prices and highest mobile broadband user penetration was observed in those countries where at least one independent challenger MNO was present, for example Sweden and Finland, or among poorer member states including Estonia, Latvia, Lithuania or Poland.

Helsinki based consultancy Rewheel carried out the study, which targeted smartphone tariffs that included as a minimum 2GB of data and 200 off-net national minutes per month. The price of such offerings across the EU ranged between €8 and a staggering €78 a month.

The lowest available prices in the 13 most “protected” markets (those with no challenger), were on average 140 per cent higher than in the rest of the EU. Many of these markets also had one or more of the active MNOs belonging to the “E5 Group” (Vodafone, Deutsche Telekom, France Telecom, Telefonica and Telecom Italia).

In fact, E5 Group MNOs do not drive price competition in markets where they are the challenger number three or four operators, pricing at the same uncompetitive level (more than €40) both when they are the market incumbent (first or second placed) or the market challenger.

Meanwhile, the lowest available prices in those 15 member states which had only two or three MNOs were 46 per cent higher than in the 12 markets which had four active MNOs. Independent challenger MNOs price on average below €20, the survey found.

Moreover, in countries where prices are up to seven times higher – paradoxically mostly EU’s poorer newest member states – penetration of active mobile broadband users is noticeably lower, found the study.

Of concern is the prediction that further operator consolidation in Europe would most likely result in higher prices for consumers as the lowest available price in member states where only three MNOs are present is 46 per cent higher than in member states having four MNOs.

And protective pricing harms EU mobile internet adoption, with the penetration of active mobile broadband users in member states where an independent challenger is present, is on average 34 per cent higher than in member states where only incumbents and/or E5 Group members are present.

“The digital transformation of economies and societies is one of the main drivers of economic recovery of the European Union. Smartphones represent the personal vehicles and their tariff plans the fuel of this transformation. But while in the member states with most progressive mobile markets an average citizen can use its smartphone for less than one per cent of its net wage income, in the poorest member states it would need to pay as much as 10-17 per cent, which is clearly unaffordable for the masses,” said Antonios Drossos, Rewheel’s managing partner.

“It is our conviction that unless European and member state authorities take the necessary corrective measures poorer member states, which are mostly affected, will underperform their wealthier peers in digital and overall economic competitiveness and growth.”


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