Operators strive to meet ARPU and service revenue targets across their mobile and converged businesses through tariff innovation that stimulates data usage and monetises data demand - adding innovative services on top of connectivity such as security, cloud and OTT video, while introducing wider adjacent sector initiatives.
Handset ownership schemes have proven to be effective at driving consumption alongside insurance and screen cover. Personalised offers, goodies and reward programmes have also proven effective in stimulating usage while limiting churn.
Background to the Report
MNO ARPU or ARPA continues to face pressures from price competing players seeking market share as well as regulation in the form of MTR, interconnection and data pricing. Recognising the need to become a fully-fledged digital services player many, MNOs today are striving (and some are winning) in becoming major convergence players offering a variety of services that address both the individual and household needs. Market circumstances (such as strength of the incumbent, challenger and level of fibre and or pay-TV penetration) plays a decisive role in determining the success of an operator's overall strategy in driving service revenue and ARPU.
From a mobile perspective, driving data usage and being cognisant of consumers' data needs in the face of ever more intensive data applications and services has formed the basis of mobile tariff design by MNOs. Most MNOs have inflated their inclusive data allocation in recent years to meet data demands however in many ways they have struggled to maintain pricing levels in order to keep competitors at bay.
Operators are finding ways to offset declining voice revenue by driving data monetisation through smartphone purchase/ownership schemes and innovative tariff design that addresses data usage and monetises further data and connectivity use cases. This along with retention initiatives such as personalised offers, personalised customer service and reward schemes encourage customers to engage with the operator propositions and its service initiatives.
While video continues to be an opportunity particularly in the area of traditional convergence but also as an OTT method of countering established cable and satellite players, operators acknowledge the ARPU challenges they face and are looking to adjacent areas such as insurance, banking and connected cars.
However, while there are common pressures in terms of customer expectations for volume and pricing of data and other traditional (voice and SMS) services, operators' experience of responding to those pressures has been very mixed. This finding led tefficient to state that there was no revenue upside to unlimited data bundles. Subsequent research by the company illustrates just how variable the results of responding to market and regulatory pressures are, as shown in Figure 1.
According to tefficient, while data usage grew for 100% of operators, ARPU only grew for 46% of them. While the image is difficult to decipher, it is apparent that operating companies within a single group (e.g. Vodafone and Telefnica) may also have very different experiences.
Some of the differences may be caused by variances in local conditions (e.g. level of competition, activities of regulator, market and tariff history).
The remainder of this report reviews some specific operator initiatives currently being deployed to drive ARPU in their traditional communications and media businesses, seeking to identify the common factors that help to ensure retention (and even growth) in ARPU in challenging and rapidly evolving markets.
Following this background introduction, this report comprises:
- Section 3 - Case examples reviewing the strategic approaches adopted by certain MNOs - Telefnica O2 Deutschland, Telefnica Movistar Spain, Telenor Norway, Elisa and DNA Finland, Vodafone Spain and Maxis Malaysia to sustain or improve their ARPU position and maintain growth in their consumer mobile business;
- Section 4 summarises the findings of this research;
- Section 5 lists a series of recommendations for operators looking for inspiration on strategic and propositional tactics being deployed by operators to sustain and grow ARPU.
- Competitive ARPU erosion for many operators
- Emerging digital service provision opportunities
- Regulator attacks on high margin elements of operator business models
- Pressure of ARPU from decline in legacy revenues and tariffs
- Continued exponential increase in demand for data
- Need to defend against digital player acquisition of share of consumer wallet
- Migrate customers to new, lower churn, relationships
- Add value through convergent offers
- Personalise and customise service and relationships
- DNA Finland
- Elisa Finland
- Maxis Malaysia
- Telefnica Movistar Spain
- Telefnica O2 Deutschland
- Telenor Norway
Key Topics Covered
1.1 Key Infographic
1.3 Three i3
2 Background and Content
2.1 Background to the Report
2.2 Report Content
2.3 Currency and Conversions
2.4 Further Questions and Feedback
3 Case Examples
3.1 Telefnica O2 Deutschland
3.1.1 Focus on Postpay
3.1.2 Postpay Proposition Approach - O2 Free Tariffs
22.214.171.124 New O2 TV Service
126.96.36.199 O2 Cloud
3.1.3 Prepay Proposition Approach - Free Tariffs
3.2 Telefnica Movistar Spain
3.2.1 Convergent Offerings and Content are Key
3.2.2 Convergent Offers
3.2.3 Standalone Postpay & Prepay Offers
3.2.4 Extending the Converged Customer Footprint
3.2.5 Other Upcoming Movistar Initiatives
3.3 Telenor Norway
3.3.1 Driving Value in Postpay
3.3.2 Postpay Tariffs
3.3.3 Youth-oriented Tariffs
3.3.4 Further upselling Initiatives
3.3.5 SWAP Handset Programme
3.4 Elisa Finland
3.4.1 Unlimited Data Tariffs Tiered by Speed
3.4.2 Elisa's Prepay Bundles
3.5 DNA Finland
3.5.1 Unlimited Data Tariffs but with Fixed Contracts
3.6 Vodafone Spain
3.6.1 Competitive Pressures
3.6.2 2019 Turnaround Efforts - Speed-based Tariffs
3.6.3 Prepay Tariffs
3.7 Maxis Malaysia
3.7.1 Tackling Competitive Pressures
3.7.2 Encouraging Migration to Postpay
3.7.3 Standard Postpay - Family Orientated Tariffs
3.7.4 Device Ownership Options
3.7.5 Prepay Propositions
3.7.6 Measures to Stabilise Prepay ARPU
4.1 Review of Attempts to Sustain ARPU
4.2 Headline Conclusions
For more information about this report visit https://www.researchandmarkets.com/r/6p0y5k