In my journeys around APAC (Asia Pacific region) over the past few months, a common theme is the explosion of mobile broadband (MBB), as reported in previous articles in this weblog such as Mobile Broadband Explosion, The Internet’s Gone Video, and Mobile and DSL Broadband Compared. However, the impact of that explosion on the operator is quite different from country to country. In this article I’m just picking on four countries: Hong Kong, Singapore, Australia and the Philippines; to compare and contrast the impact MBB pricing and MBB terms and conditions (T&Cs) have on customer behavior.
Hong Kong: Mobile broadband as a complement
In this market the two main mobile broadband plans termed ‘Unlimited Local Usage Plans’ are:
$188/month ($24 USD) up to 3.6Mbps down/1.5Mbps up; and
$348/month ($45 USD) up to 7.2Mbps down/2Mbps up.
Local Usage refers to within HK (Hong Kong) region, as roaming is common given the relatively small size of the region. Usage is limited to browsing, email, intranet access, streaming, uploads and downloads, VoIP and instant messaging. The fair usage policy blocks peer-to-peer file sharing, machine-to-machine applications, and use that unfairly exploits SmarTone-Vodafone.
In talking with HK residents it’s apparent that the T&Cs have impacted behaviour. The limitations have curtailed the savvy early adopters that look to exploit arbitrage or ‘open door’ opportunities. Mobile broadband is generally perceived as a complement to fixed broadband in the home, rather a replacement. Hence the availability of a daily use tariff plan of $68/month ($9USD) + $18 ($2USD) per day usage for up to 7.2Mbps down/2Mbps up (with a 1GB per month limit, after which there is an additional usage charged at $2 (26c USD) per MB.
Singapore: Mobile broadband war
In this market the focus has been on true unlimited data plans, without the constraints on traffic types, with pricing is similar to HK:
Monthly Subscription / Download Speed / Upload Speed
$22.42 ($15USD) / 1Mbps / 512kbps
$27.10 ($18USD) / 2Mbps / 512kbps
$35.95 ($24USD) / 4Mbps / 1Mbps
$48.51 ($32USD) / 7.2Mbps / 2Mbps
In talking with the residents the 7.2 Mbps MBB package is perceived favorably to the 8 Mbps DSL package at $45, because of the higher upstream rate of 2Mbps compared to 512 Kbps for the DSL service which significantly improves peer to peer performance. As MBB usage on an individual basis increases, and the numbers of customers taking the service also increases, it will be interesting to see whether the ‘profitable majority’ can continue to subsidize the ‘unprofitable high-usage minority.’
Philippines: Almost giving it away, but not…
Smart in the Philippines has pricing simplicity nailed, 10 Pesos (20c) for 30 minutes. Let’s assume a mean throughput of 100 kbps, that’s 22 MB for 20c, which is the equivalent of $7USD for 1GB, with no apparent limitations on traffic type. With the faster upstream rates compared to DSL broadband (which has the same pricing structure in the Philippines) MBB presents an attractive proposition for the individual user. However, for those who download 100GBs, or remain connected 24/7 then the bill can rack up to a cap of $288 USD. So Smart’s usage based pricing provides a simple to understand model which imposes a natural cap for the ‘big downloaders.’
Australia: Training customers with Usage caps
Australia is in the middle of a bragging rights competition with respect to who’s got the biggest mobile broadband pipe. Telstra recently demonstrated HSPA+ (21 Mbps) on their network, and are on course for launch early next year, as promised at MWC (Mobile World Congress) in February of this year. Australia’s usage caps avoid the hassle of defining traffic types, below I show a sample of MBB pricing. With DSL broadband available at similar pricing and caps to wireless, the critical decision for the customer is whether the broadband service needs to be shared, i.e. broadband for the family at home.
In talking with residents, firstly, they’re aware of the premium they’re paying compared to other markets, especially when I described my FiOS package from Verizon 🙂 But what was interesting was the variety of packages people choose. For example, some would choose a wireless package for the family as they have a weekend apartment, so it was cheaper to take the wireless option, than two fixed packages. Some had both, fixed for the family and mobile for business; and a few MBB only. The overriding feature of the market was regardless of their package they were all highly aware of how their online behavior impacts monthly usage, to the point in a few cases of stifling their usage. I didn’t see this awareness in the other markets reviewed in this article.
Telstra Pricing (at low usage wireless/DSL packages are comparable, but at the top end DSL has the edge)
$29.95 ($19 USD) 200MB
$59.95 ($38 USD) 1GB
$89.95 ($57 USD) 5GB
$129.95 ($83 USD) 10GB
Optus Pricing (comparable between DSL and wireless)
yes’ Wireless 2GB 2GB $39.99 ($25 USD)
‘yes’ Wireless 5GB 5GB $49.99 ($32 USD)
‘yes’ Wireless 6GB 6GB $59.99 ($38 USD)
Three (Note there’s a coverage issue outside the main cities, which means customers roam onto Telstra and pay a roaming fee)
1GB $15 ($9 USD)
3GB $29 ($18 USD)
6GB $39 ($25 USD)
Conclusion
The exact figure at which a customer becomes unprofitable for mobile broadband varies greatly between operators; i.e. on the service pricing, the size and distribution of the network, and the cost of backhaul from the incumbent fixed line provider, etc. However, as a very rough rule of thumb, if a customer is going north of 30GB per month, then there’s a fair chance they’re unprofitable.
In summary:
- Hong Kong and Singapore provide a good contrast on the power of T&Cs in controlling certain traffic types that limit high use early adopters, but also how that impacts how the market views MBB. With people in Singapore viewing it as a competitive DSL replacement.
- In the Philippines the power of very simple usage based billing provides a natural brake to high usage.
- Australia demonstrates the power of getting people to think about their usage.
As a customer, Singapore provides an ideal market, a competitive price, no need to worry about usage, and the freedom to do whatever I choose. Philippines is an interesting model, especially for the majority of users who are not intensive broadband users. The Australia model has the greatest spread in pricing across the operators, it will be up to the customer to vote with their wallets on where the caps and pricing go.