73% of 4G Retail Price Plans Have Dropped
Mobile data plan retail prices have been dropping, in many countries, since early 2013, according to ABI Research.
ABI Research now has found that Long Term Evolution 4G network tariffs also are falling, either in actual posted prices or as measured by “cost per bit.”
Comparing mobile Internet access pricing between the second quarter of 2012 and fourth quarter of 2012, 73 percent of countries surveyed have reduced the “effective cost” of their 4G tariffs to a significant degree.
The effective cost, measured in terms of “dollar per Gigabyte,” has dropped by 30 percent. In the U.S. market, service providers generally have maintained retail prices, but introduced larger data quotas.
In Australia, Sweden, Japan, and Saudi Arabia the operators lowered the monthly fee but have kept data quotas unchanged.
That state of affairs poses questions, such as whether mobile service providers actually will be able to drive higher revenue, in the near term, from LTE access services.
“ABI Research is concerned that a number of operators have introduced 4G pricing plans at the same, or even lower, price points than 3G,” stated Jake Saunders, VP for forecasting. “In Norway, Telenor has introduced 4G tariffs that are cheaper than 3G.
At least so far, it appears that some retail pricing plans, such as the “shared data plans” available from Verizon Wireless and AT&T Wireless in the U.S. market, have provided revenue lift.
Verizon’s “Share Everything Plans” arguably helped Verizon achieve a net increase of 2.2 million subscribers in the fourth quarter of 2012, as well as a boost in service revenues by 8.5 percent.
But that is an inference, since lots of other factors are at work, ranging from Verizon’s 4G coverage, reputation for quality and the fact that Verizon has been gaining share rather steadily over the past few years.
When looking at tariffs in the “cheapest 20” markets between the third quarter of 2013 and third quarter of 2012, ABI Research found that the average mobile Internet price dropped by 17.7 percent.
Also, ABI Research estimates that 38 percent of the lowest priced data plans worldwide are 4G tariffs compared to 21 percent a year ago.
Of course, as often is the case for communication services, lower prices spur usage and revenue growth.
While mobile data pricing is on the decline, data revenue has grown because more people are accessing the Internet from smart phones.
Total data revenue will reach $400 billion in 2013 with a year over year increase of 13.4 percent, and is forecast to grow to $527 billion, accounting for 47 percent of global mobile service revenue in 2018.
At the same time, many service providers in developed markets are shifting revenue growth strategies directly to mobile data, and away from voice and texting, often by offering free in-country calling and text messaging.
Multi-device shared data plans represented just six percent of tariff plans, but its share jumped 20 percent, quarter over quarter, ABI Research says. Most common are tiered consumption plans, where pricing varies on the amount of traffic consumed, at about 66 percent of all plans.
India offered the lowest priced plan in ABI Research’s Mobile Internet Pricing study of fourth quarter 2012 prices, and the most-affordable mobile data plans decreased 29.4 percent year-over-year, compared to fourth quarter of 2011, ABI Research has said.