Mobile broadband pricing will drive 3G traffic

Mobile data pricing for traffic-intensive services is becoming more affordable for consumers, with a proliferation of flat-rate tariffs for smartphones and flat-rate mobile broadband bundles, with generous monthly usage allocations (for example, 5GB or more).

Flat-rate pricing for smartphones is becoming increasingly prevalent, to give mobile users the freedom to access a broadening range of services with their smartphones (such as accessing catch-up TV services).

Consumers are increasingly adopting mobile broadband services instead of fixed broadband services. Flat-rate bundles now represent the most common form of mobile broadband pricing across Europe, with the average bundle being about 4GB (at end of 2008). The trend is for ever-increasing bundles of data, with monthly usage allowances above 10GB not uncommon. Some operators are resisting mobile broadband price decreases by increasing usage allowances, and this trend is set to continue.

There are significant differences in pricing of mobile broadband services between operators and countries, as shown in the table below, which shows examples of current mobile broadband pricing in Europe, where the equivalent price per gigabyte varies by more than a factor of 10.

New-entrant 3G operators, such as 3 in the UK and Play in Poland, have been more proactive with mobile broadband services than many incumbent 3G operators. They have greater capacity per customer and have a strong need to increase market share. For example, Play in Poland only had about 2 million customers in March 2009. In the UK, 3 has a customer base of about a quarter of the size of other UK operators. In March 2009, 3 UK had 5.38 million customers compared with 20.4 million customers for Telefónica O2. Furthermore, 3 has a 50% greater allocation of paired 3G spectrum than incumbent 3G operators Telefónica O2, Orange and T-Mobile. As shown in the table, the cheapest mobile broadband services had an equivalent price of less than USD2 per gigabyte in June 2009.

Mobile broadband service pricing for selected 3G operators, June 2009