the role of 4g in mobile data monetisation

Source: Analysys Mason, 2013

The Role of 4G in Mobile Data

Monetisation

Presentation for Mobile Broadband SIG

8th May 2013 • Ronan de Renesse, Principal Analyst


Smartphones take a large share of data revenues but LTE has more value to offer to MBB

2

Share of mobile data connections and revenues by device type – UK, 2008 and 2012

The Role of 4G in Mobile Data Monetisation

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Connections Datarevenues

Connections Datarevenues

2008 2012

Mobile broadband

Smartphones

LTE


0

1

2

3

4

5

6

7

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

Num

ber

of

con

nectio

ns (

mill

ion

)

Large-screen (LS) Mid-screen (MS)

Tablets are driving a major shift in mobile broadband device mix

▪ New market data led us to reduce our

MBB forecast significantly

▪ Key assumptions:

– Tethering replaces dongles

– Connected tablets replace laptops +

dongle

– Competition from WiFi

– Attractive fixed broadband bundles

▪ Shift in spend and mobile data consumption, not an absolute decline

▪ Residential complementary connections

are most exposed

3

Mobile broadband forecast by device type, UK, 2010-2018



Tablets could contribute more

4

Tablet owners by device capabilities -UK

Tablet owners by device origin – UK new tablets

Source: Connected Consumer Survey, 2013

45%

36%

19%

Wi-Fi only

3G - connected

3G - not connected

22%

49%

29%

Service provider (operator)

3rd party (retailer)

Gift (family and friends)


LTELTE


33% of UK smartphone owners also have a tablet and a laptop

5

UK smartphone panel by tablet and laptop ownership

Connectable device ownership for UK smartphone users

Source: Connected Consumer Survey 2013

2%

59%

33%

6%

Tablet Laptop

Tablet & Laptop Neither


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Lap

top

PM

P

HH

co

nso

le

Ta

ble

t

eR

ead

er

Sha

re o

f U

K s

marp

hon

e r

esp

on

de

nts

LTE


Multi-device works in the US but can it be applied to Europe?

▪ AT&T and Verizon launched in 3Q 2012

– 2 million subscribers signed up for

AT&T’s plan first 2 weeks after launch.

– 90% of AT&T smartphones are on a

shared plan, more than a quarter are on

a 10GB per month plan.

– Verizon has changed its reporting to

‘average revenue per account’ (ARPA),

reporting an average of 2.64 device

connections per account.

– AT&T reports an average of 3 devices

per account.

6

Price per gigabyte of selected mobile data plans, USA

Data plan

Price per gigabye (USD)

AT&T‘Mobile share’

Verizon Wireless‘Share

Everything’

1GB 85

(40 + 45 per phone)

90(50 + 40 per

phone)

6GB20.33

(90 + 35 per phone)

20(80 + 40 per

phone)

10GB

15(120 + 30 per

phone)

14(100 + 40 per

phone)

20GB

11.5(200 + 30 per

phone)

Offered, but not quoted



0%

5%

10%

15%

20%

25%

30%

35%

Po

lan

d

UK

Sp

ain

US

A

Fra

nce

Germ

an

y

Perc

enta

ge

of

respo

nde

nts

LS only MS only LS & MS Tethering Personal hotspot

Europe responds better to tethering than multi-device tariffs

7

Share of respondents using MBB services, mobile hotspots and tethering – October 2012

Source: Connected Consumer Survey 2013


LTE


Mobile data pricing strategies are capital to secure future mobile data monetisation paths

8

Unlimited (capped or throttled)

Maximum available speed

Reduced speeds

More usage at maximum speed

Monetisation path

Openly advertised data allowance

More usage at maximum or reduced

speed

Limited usage at maximum speed

No more usage until next billing period

Monetisation path

Truly unlimited

Maximum available speed

Monetisation pathHigher-speed

usage


LTE LTE

LTE


UK view: volume-based (EE) versus unlimited (3UK)

9

iPhone 5 32GB 24 months TCOSIM-only smartphone 12 & 1 month deals

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

0 5 10 15 20To

tal co

st of

ow

ne

rship

(G

BP

)Data allowance (GB per month)

EE 3UK_500

3UK_2000a 3UK_2000b

3UK_2000c

-

10

20

30

40

50

60

70

0 5 10 15 20

Mo

nth

ly f

ee (

GB

P)

Data allowance (GB per month)

EE 3UK_200

3UK_600 3UK_2000



How long will 4G price premiums hold for?

10

Allowance versus access charge for entry-level 4G LS MBB services – Q4 2012



Market drivers and inhibitors for 4G adoption

11

� Service availability

− Network coverage

− Number of operators with LTE

� Service/Network quality

− It’s not just about speeds (e.g. VoLTE,

VAS services)

� Cheaper mobile data charges

− 3G/4G tariff differentiation to disappear

2 years after launch, quicker for

handsets

� Devices

− LTE devices should be made available

to customers as soon as possible

� Expensive mobile data charges

− High 4G price premium hinder overall

adoption

� Lack of devices

− Not that many devices yet available on

800MHz and 2600MHz

− 4G devices too expensive

� The prepay market

− 46% of UK handset connections are on

prepay tariffs

� Devices on long replacement rates

− Tablets have longer replacement rates

than smartphones



4G UK forecast – 47% of mobile connections will 4G active by the end of 2018

12

4G UK forecasts by device type, 2010-2018


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0

10

20

30

40

50

60

2012 2013 2014 2015 2016 2017 2018

4G

share

of

tota

l co

nn

ections (

%)

4G

con

nection

s (

mill

ion)

4G M2M

4G MBB

4G handsets

4G% of total


Thank you

13

Ronan de Renesse

Principal Analyst

[email protected]

Twitter: @Ronan_AM


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