Normally one might expect businesses that have few competitors and high barriers to entry into their market to be delighted when demand for their main, and largely unregulated service was growing rapidly and expected to continue to do so for years to come. One might also suppose that they might be grateful to the entrepreneurial businesses that are helping to generate this increasing demand.
But, I learned at the Mobile World Congress in Barcelona, this is not the case. Mobile operators faced with ever growing demand for mobile data capacity complain that the investment required is very high, that the app and cloud services providers make profits at their expense, and that they are over regulated, with the regulators forcing down the price of their voice services.
In fairness, extra voice revenue could be the cash cow to help pay for the investment, but data traffic far exceeds voice traffic and has done so for several years now. Operators need to rebalance their tariffs, as some are beginning to do, so that they better reflect the costs of providing the services.
Their other complaint is the cost of spectrum auctions – they would prefer a beauty contest. Here they have a case. Any sensible taxation system should provide incentives to invest and then tax the profits, not take a hefty slice of the investment capital before the business can start its investment programme.
At last the 4G auctions in the UK are over and now all UK mobile operators are able to deploy 4G (LTE). But those customers hoping for download speeds of 100Mbps should note that a recent survey by OpenSignal showed that the global average speed for 4G (LTE) is 10.4 Mbps. Individual operators’ average download speeds vary from 5.5Mbps (Japan) to 24.4 Mbps (Sweden).
I was amused by a comment made by the BBC’s Rory Cellan-Jones when reviewing new products, including 3-D handsets at the Mobile World Congress at Barcelona today. I couldn’t capture the exact phrasing, but the essence was ‘[although there are all these innovative products] for many users a good 3G data signal would be really good.’ As one who frequently finds gaps in coverage when travelling around southern England, I hope the operators were listening.
In my earlier blog, Bill Shock, I recounted the story of a young woman who had been treated to a bill of £27,000 after losing her phone overnight. This prompted me to look at the relationship between price and usage.
Data on cost and usage of international roaming traffic, especially data traffic, is not widely available, but that for domestic traffic is more readily available. Prices and usage for domestic mobile calls vary considerably between countries, which permit comparison of any relationships between the two. Continue reading “Price Sensitivity and Bill Shock”
Every now and again a new story about international roaming charges comes to my attention. Recently I could not help overhearing some English people in a restaurant talking about the experience one of their daughters had following loss of her phone. Seemingly the daughter had been travelling in Spain and had taken an overnight bus to a new destination. After she had set out, she found she didn’t have her phone with her. She thought that she had probably packed it in her rucksack by mistake (it has been with several items she did pack) and as it would have been very difficult to get to the bag while travelling left it at that and fell asleep. The next morning she found that her phone was indeed missing and duly reported it to her network operator. Under their rules, the same as those applied by most operators, she was liable for any calls made before she reported its loss. This turned out to be some £27,000. At that price presumably this was for data download, rather than voice. Unfortunately I didn’t hear then end of the story as I was interrupted by the waiter at that point, so I don’t know if the operator did the honourable thing and waived the bill or not. I also don’t know when it occurred; the people recounting the tale were speaking as if it was recent, but they were doing so some months after the EC mandatory limit on bills for data downloads were introduced. Continue reading “Bill Shock”