Europe must go beyond the vanilla data plan - Mobile World Live

Europe must go beyond the vanilla data plan

12 SEP 2016

Partner Feature: The components are in place for European players to cash in on mobile video, but operators in the US and Asia continue to pave the way. It is now time for Europe to seize this growing opportunity. 

Today, mobile video is the dominant source of data traffic on mobile networks in a number of countries, and makes a significant contribution to data revenue in both developed and emerging regions. However, despite the huge demand, many European operators have failed to seize the initiative in monetising this growing opportunity.

In comparison to counterparts in the US and developed parts of Asia-Pacific, which have shown a stronger ambition to monetise video content, European players lag behind, and are yet to update strategies and business models to unleash the potential that exists in the mobile video market.

Asian and US players, meanwhile, can be credited with pioneering certain approaches, such as tariff innovation, through zero rating video traffic, or unveiling mobile apps dedicated to video and releasing new services to tap into mobile video revenue.

Notably, European operators lack these innovations in their armouries.

And this is somewhat of a surprise, given that Western European mobile networks are as ready for mobile video as any other region in the world.

Mobile video report
Huawei’s mobile video report (click to download), which will be launched at the upcoming European Mobile Video Summit during the IBC 2016 conference, looked into market maturity and drivers for mobile video content, in collaboration with Strategy Analytics, Huawei mLAB, and other third parties. It found that Western European, in fact, rates highly across the three key dimensions – technical, economical and content available (see image below, click to enlarge) – required to tap into mobile video growth.


From a technical aspect, the region boasts high smartphone penetration and widespread Wi-Fi coverage, at 54 per cent and 66 per cent, respectively, much higher than the global average of 35 per cent and 28 per cent for both metrics.

Western Europe also scored highly in offering affordable mobile data packages.

The average price for 5GB of data in the region stands at $42, competing closely with developed APAC countries, which charge an average of $36. Both are also significantly lower than the typical North American operator, which charges $57.

When it comes to content, Western Europe leads the way, said Strategy Analytics, with 120 OTT services available for smartphone users, out of 200 worldwide.

Missed opportunity
Against the backdrop of such factors, European operators have focussed on selling vanilla data plans and striking partnerships with content players to offer bundled content offers within their subscription plans.

The region’s operators have therefore fallen short when it comes to introducing innovative pricing, and mainly target selling larger data plans to cover all classes of mobile data users.

To move beyond vanilla data plans, not only to drive mobile video consumption but also earn additional revenue, Huawei’s report looked into certain approaches adopted by players in the US and Asia Pacific, which notably had distinct advantages and disadvantages (see image below, click to enlarge).


Adopting and developing a dedicated video app, such as Verizon with go90, SingTel with HOOQ or LG Uplus’ offering, could give European operators access to new revenue opportunities, add value to bundled content services, and enter a new business segment.

The biggest risk however comes from strong competition, such as YouTube for example, as well as the need to invest heavily acquiring compelling video content.

When it comes to tariff innovation, such as the zero-rated offering T-Mobile US had with Binge On for streaming video, or the unlimited data plan it has recently unveiled with T-Mobile One, the US operator is clearly encouraging video use by alleviating subscriber concerns of going beyond data limits and paying overages.

It is also able to charge higher prices for its tariffs, and in effect, monetise heavy video users.

But such an approach is also open to competition, as such tariffs can be easily replicated, and arguably could also be in breach of net neutrality principles, particularly when it comes to throttling video quality at the expense of unlimited data.

Similar issues could arise with sponsored data, another Verizon strategy, among others. But this again opens up new revenue streams and stimulates mobile media use.

Meanwhile, the more commonplace approach in Europe of partnering with OTT and VOD players, such as the deal between Vodafone and Sky/Netflix, allows operators to integrate content, and add value to their tariffs.

But, ultimately, this is more reliant on the content provider, not the operator

Time for change
It is clear that European operators must now move beyond offering vanilla data plans and while the approaches on show so far have been pioneered by US and Asian players, none are mutually exclusive, or are they static. And they are all not without risk.

Western European operators have the opportunity to seize the initiative and take further steps to achieve better returns on video, as the mobile video market continues to evolve.


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