Rewheel
o n e • s t e p • a h e a d
Debunking GSMA & ETNO claims (echoed by some
Commission officials)
that EU is falling behind the US
Investments  fixed and mobile broadband  mobile data usage  network speeds 
consumer prices
Brussels 17 October 2013
Presented to DG Competition, DG CNECT, submitted to BEREC, Member States
governments & ECTA
Rewheel
© Rewheel Ltd. All rights reserved.
Genuine single European telecom market as envisaged by Vice President
Almunia
“First, it would be a market where customers can obtain services from any of the operators
present in the EU, regardless of location;
Second, operators from any Member State could offer their services competitively to end
customers throughout the EU; and
Finally, in a genuine Single Market customers would not have to pay extra charges for intra-EU
calls, or for roaming within the EU – which is one of the provisions included in the Regulation
approved this week.
Market participants should also resist the temptation to use their commercial behaviour to create
artificial barriers to intra-EU trade. Some mobile operators, active across several Member
States, do not behave as truly European operators. This needs to change.
But the risk is that the big incumbents may want to continue playing an asymmetric game
in which they can move across the entire Single Market whereas their users and business
customers cannot escape from their national borders.
Vice President Kroes’s Connected Continent proposal, as it stands, will without
any doubt, not bring us any closer to a genuine single European telecom market
© Rewheel Ltd. All rights reserved.
Slide | 2
Roaming aside, what are the commercial barriers and this asymmetric
game that Almunia is referring to?
Big European telco pricing in protected oligopolies and in competitive markets
2GB basket smartphone tariff with unlimited minutes & SMS
€90
The big EU telco groups price at competitive level only in markets where they face challanger MNOs. In protected oligopolies they charge up to 266% more
€80
€70
+126%
+266%
+115%
€60
€50
+67%
€40
Euro
€30
€20
€10
€0
Source: Rewheel report October 2013 © All rights reserved
Challangers that the E4 face in competitive markets
The full chart can be found in Rewheel’s latest premium report - Price benchmark of smartphone tariffs with unlimited minutes & SMSs
in EU28, US, Switzerland and Norway – October 2013
Big telcos price at competitive levels only in markets where they face challenger
MNOs. In protected oligopolies they charge up to 266% more!
© Rewheel Ltd. All rights reserved.
Slide | 3
Roaming aside, what are the commercial barriers and this asymmetric
game that Almunia is referring to?
Vodafone group MNO GB prices across 12 European markets where it is present
Smartphone tariffs with unlimited minutes and SMS
€140
€130
Vodafone MNOs charge up to 320% more per GB in 3
and 4 player protected oligopoly markets than what
Vodafone UK charges in the UK's competitive market
€120
€110
€100
€90
€80
€70
€60
€50
€40
€30
€20
€10
The trend line slope shows the approximate variable, GB volume dependent price while the
crossing point on the Y axis marks the approximate data-traffic independent fixed tariff charge
€0
0
GB included in smartphone tariffs with unlimited minute & SMS
10
Rewheel report October 2013 © All rights reserved
The full chart can be found in Rewheel’s latest premium report - Price benchmark of smartphone tariffs with unlimited minutes & SMSs
in EU28, US, Switzerland and Norway – October 2013
Vodafone MNOs charge up to 320% more per GB in 3 and 4 player protected oligopoly
markets than what Vodafone UK charges in the UK's competitive market
© Rewheel Ltd. All rights reserved.
Slide | 4
Would consolidation and big telco dominance lead to higher
investments as GSMA and ETNO claim? Lets put their claim to the test...
annual telecom investment per capita 2010-2011
% of annual telecom revenue per capita invested
€ 200
€ 180
21%
Competitive market where a challenger is present
Protected oligopoly where no challenger is present
€ 160
€ 140
€295
13%
13%
13%
€ 120
€ 100
€ 80
12%
€ 60
10%
annual telecom revenue per capita 2010-2011
10%
€ 1,200
13%
15%
€ 40
€1,585
€ 1,050
€ 20
€ 900
€0
€ 750
Competitive market where a challenger is present
Protected oligopoly where no challenger is present
€ 600
Source EC digital scoreboard, OECD
©Rewheel 2013. All rights reserved.
€ 450
€ 300
€ 150
€0
Source EC digital scoreboard, OECD
©Rewheel 2013. All rights reserved.
In protected oligopoly markets like the US and Switzerland where the revenue per capita is higher
operators have invested higher absolute amounts in 2010-2011. However, this is also true for the
very competitive data progressive, low price Nordic markets.
Investments as a share of revenues are the same across EU and US.
© Rewheel Ltd. All rights reserved.
Slide | 5
Have investments in overpriced protected oligopolies yielded higher data usage,
higher fixed and mobile broadband penetrations?
% of population with mobile broadband connection 2012
% of population with fixed broadband connection 2012
45%
40%
110%
Competitive market where a challenger is present
Protected oligopoly where no challenger is present
35%
it includes both smartphone and dedicated data only connections
100%
90%
Competitive market where a challenger is present
Protected oligopoly where no challenger is present
80%
30%
70%
25%
60%
50%
20%
40%
15%
30%
10%
20%
5%
10%
0%
0%
Source EC digital scoreboard, OECD
Source EC digital scoreboard, OECD
1.6
©Rewheel 2013. All rights reserved.
©Rewheel 2013. All rights reserved.
monthly mobile data consumption per capita 2012 (GBs)
1.4
1.2
Competitive market where a challenger is present
Protected oligopoly where no challenger is present
We have serious doubts about
the US figure which is an OECD
estimate
1.0
0.8
0.6
0.4
Europeans use more data
than Americans
0.2
0.0
Source Rewheel anaylsis
©Rewheel 2013. All rights reserved.
No. US mobile broadband penetration is similar to that of western European progressive markets.
The EU28 average is lower because it includes many eastern European protected markets, e.g. Hungary,
with very low penetration caused by the very high price of mobile data i.e.7 times the market ARPU
© Rewheel Ltd. All rights reserved.
Slide | 6
Have investments in overpriced protected oligopolies yielded better and faster
mobile networks?
10
9
actual measured fixed network speeds 2012
Competitive market where a challenger is present
Protected oligopoly where no challenger is present
40
actual measured LTE network speeds 2011-2013
35
8
Competitive market where a challenger is present
Protected oligopoly where no challenger is present
30
7
6
25
5
20
4
15
3
10
2
1
5
0
0
©Rewheel 2013. All rights reserved.
Source Akamai report 1Q2013, Rewheel analysis
40
Source Rewheel Oct 2013 report
©Rewheel 2013. All rights reserved.
actual measured LTE network speeds 2011-2013
35
30
Competitive market where a challenger is present
Protected oligopoly where no challenger is present
25
20
15
10
5
0
Source Rewheel Oct 2013 report
©Rewheel 2013. All rights reserved.
No. Europeans enjoy faster overall mobile network speeds and 2x faster LTE speeds!
© Rewheel Ltd. All rights reserved.
Slide | 7
Have investments in overpriced protected oligopolies yielded better and faster
mobile networks?
Actual measured average mobile network speeds in September 2013
in EU28, US, Switzerland, Norway, South Korea and Japan
2G/3G/4G blended as end users experience
10
9
8
Mbps
7
GSMA&ETNO claims echoed by VP Kroes are false.
Mobile networks are faster in EU than in the US
6
5
4
EU19 LTE: member state markets where LTE is launched and there
were measurement data available at September 2013
3
2
1
0
Source: Actual enduser measured speeds by OpenSignal, Rewheel analysis
©Rewheel 2013. All rights reserved.
The full chart can be found in Rewheel’s latest premium report - Price benchmark of smartphone tariffs with unlimited minutes & SMSs
in EU28, US, Switzerland and Norway – October 2013
No. EU28 is in parity with US and among the 19 member state markets where
operators have launched LTE, Europe is ahead of US.
© Rewheel Ltd. All rights reserved.
Slide | 8
Have investments in overpriced protected oligopolies yielded better and faster
mobile networks?
Actual measured average LTE mobile network speeds: July 2011 - September 2013
in EU28, US, Switzerland, Norway, South Korea and Japan
40
EU19 LTE: member state markets where LTE is launched and there
were measurement data available at September 2013
35
30
Harmonized "LTE" (800, 1800, 2600)
spectrum band plan accross EU28
Europe is leading the world in superfast LTE speeds.
More than 2 times faster than US and 50% higher than
Mbps
25
20
15
10
5
Highly fragmented national
spectrum band plan in US
0
Source: Actual enduser measured speeds by OpenSignal, Rewheel analysis
©Rewheel 2013. All rights reserved.
The full chart can be found in Rewheel’s latest premium report - Price benchmark of smartphone tariffs with unlimited minutes & SMSs
in EU28, US, Switzerland and Norway – October 2013
No, Europe is leading the world in superfast LTE speeds. More than 2 times
faster than US and 50% higher than South Korea LTE speeds!
© Rewheel Ltd. All rights reserved.
Slide | 9
So what would be the price paid for consolidation and big telco dominance?
price of GBs in smartphone tariffs with unlimited minutes and SMS
bar labels: traffic independent fixed charge in smartphone tariffs
€ 16.0
The higher absolute investments in the
US and Swiss protected oligopolies,
which are funded by the very
high prices, have not yielded better
and faster network services!
€25
€ 14.0
€ 12.0
Competitive market where a challenger is present
Protected oligopoly where no challenger is present
€ 10.0
€ 8.0
€35
€ 6.0
€ 4.0
€ 2.0
€29
€26
€29
€20
Denmark
UK
Austria
€26
€51
€49
US
Switzerland
€28
€ 0.0
Finland
Source Rewheel premium report October 2013
EU14
Czech
Republic
Germany
Hungary
©Rewheel 2013. All rights reserved.
price of GBs in data only tariffs
bar labels: traffic independent fixed charge in data only tariffs
€ 6.0
€7
€ 5.0
Consumers in Europe’s competitive
markets pay 5 times less use more
data and enjoy faster mobile
network speeds than in the US!
Competitive market where a challenger is present
Protected oligopoly where no challenger is present
€ 4.0
€ 3.0
€12
€ 2.0
€15
€ 1.0
7
€20
€18
€15
€21
€21
€13
€ 0.0
Source Rewheel premium report October 2013
©Rewheel 2013. All rights reserved.
The GSMA&ETNO claims, which are echoed by VP Kroes are simple not true.
© Rewheel Ltd. All rights reserved.
Slide | 10
So what would be the price paid for consolidation and big telco dominance?
German, US and Swiss protected oligopoly GB prices versus the UK
Smartphone tariffs with unlimited minutes and SMS
€180
Consumers in the German, US and Swiss protected oligopolies pay 500%
higher GB prices than consumers in UK’s competitive market
€160
y = 5.7037x + 50.913
y = 5.8465x + 49.029
y = 5.7657x + 34.459
y = 1.051x + 29.495
€140
€120
€100
€80
€60
UK €1/GB
€40
€20
The trend line slope shows the approximate variable, GB volume dependent price while the
crossing point on the Y axis marks the approximate data-traffic independent fixed tariff charge
€0
0
1
2
3
4
Rewheel report October 2013 © All rights reserved
5
6
7
8
9
10
11
12
13
14
15
16
GB included in smartphone tariffs with unlimited minute & SMS
17
18
19
20
Consumers in the German, US and Swiss protected oligopolies pay 500% higher GB prices
than consumers in UK’s competitive market
© Rewheel Ltd. All rights reserved.
Slide | 11
So what would be the price paid for consolidation and big telco dominance?
Protected oligopoly GB prices versus competitive EU market prices
smartphone tariffs with unlimited minutes and SMS
€180
€160
€140
€120
German and US GB pricing resembles more 3 MNO
protected olIgopolies such as Swizerland, and Portugal
rather than competitive markets such as the UK,
Denmark , Austria, Finland
€100
€80
€60
€40
FINLAND
€20
€0
0
GB included in smartphone tariffs with unlimited minute & SMS
20
Source: Rewheel report October 2013 © All rights reserved
Consumers in EU’s protected oligopolies (e.g. Germany, Spain, Greece, Hungary) pay up to 2200%
higher GB prices than in EU’s most competitive markets (e.g. UK, Sweden, Finland, Denmark,
Austria)
© Rewheel Ltd. All rights reserved.
Slide | 12
So what would be the price paid for consolidation and big telco dominance?
Big EU telco versus challenger operator GB prices accross their markets
Smartphone tariffs with unlimited minutes and SMS
€160
Big telcos charge 1500% more
€150
€140
€130
€120
€110
€100
€90
€80
€70
€60
€50
€40
€30
Hutchison
€20
€10
€0
0
GB included in smartphone tariffs with unlimited minute & SMS
20
Source: Rewheel report October 2013 © All rights reserve
Big European telco group (e.g. Vodafone and Deutsche Telekom) GB prices are 550% higher than prices from data
progressive Nordic incumbents (e.g. TeliaSonera) and 1500% higher than prices from challenger operators’ (e.g.
Hutchison)
© Rewheel Ltd. All rights reserved.
Slide | 13
So what would be the price paid for consolidation and big telco dominance?
Group actual measured average mobile network speed in September 2013 in EU28
2G/3G/4G blended as end users experience
Mbps
6
Hutchison average network speeds are are faster than big telco speeds in EU28!
5
4
3
2
1
0
Big telco Telefonica Challenger groups Incumbents KPN, Big telco Deutsche Big telco Vodafone
Hutcison, Tele2,
TIM, Telekom
Telekom
BITE, DNA, Play, Austria, Belgacom ,
TusMobil, Iliad
Telenor
Source: Actual enduser measured speeds by OpenSignal, Rewheel analysis
Data progressive
incumbnet
TeliaSonera
Big telco Orange
Challenger
Hutchison
©Rewheel 2013. All rights reserved.
Challengers, beside charging 500% less per GB have faster networks too!
So if big telcos swallow challengers EU consumers will start paying 500% more
per GB and get lower network speeds
© Rewheel Ltd. All rights reserved.
Slide | 14
GSMA and/or ETNO claims regarding US market superiority echoed by
some European Commission officials are simply NOT TRUE!
GSMA or ETNO claim
The factual reality
Investments
US operators invested more in
recent years
True in absolute terms when compared to
EU28. But as a % of revenue they invest the
same with EU operators
LTE roll out
Higher investment has yielded
faster LTE rollout in the US
Not true, slow legacy 3G networks forced US
operators to earlier LTE investments
Prices
EU consumers pay less per month
than U.S
Not just less, 5x less per GB in both data only
and tariffs with unlimited minutes & SMS
Usage
U.S. consumers use 2x more data
than European consumers
Not true, in many of EU’s progressive
(competitive) markets they use 3x more
Speeds
Not true, EU leads the world in fast LTE
US investment growth is
speeds (2x more US) and is in parity with US
translating into 75% faster speeds on the overall mobile connection speeds
US consumers pay 5x more for using use less data at slower connections
speeds than European consumers
© Rewheel Ltd. All rights reserved.
Slide | 15
Thank you
Rewheel
o n e • s t e p • a h e a d
Contact us at [email protected] / +358 44 203 2339
“Strategies for meeting mobile connectivity needs of EU’s
Generation Y and Y affordably and profitably”
Rewheel is specialised into being in the forefront of the mobile data
transformation
Since 2009 we have advised over 10 European mobile operators, including independent players and
Tier-1 OpCos, as well as several regulators and a number of private equity and institutional investors
and various mobile-date centric startups.
Since the onset of the mobile broadband centric 900, 1800 and 2100 MHz license renewal avalanche
in 2011 in Europe we have been providing strategy, spectrum valuation and auction theory advice
(together with our world class CCA/SMRA auction theorist partners) to five European award
processes (operator or regulator side depending on country), including new entrants and acquisitions
as well as license renewals in multi-band (typically 800,900,1800,2100 and 2600 MHz) auctions. So
far our advisory support has been directly impacting over EUR 1bn of European spectrum
investments/state proceeds.
© Rewheel Ltd. All rights reserved.
Slide | 16