Industry analysis #5 2016 Mobile data 1H 2016 Unlimited ...media.tefficient.com/2016/12/tefficient-industry-analysis-5-2016... · Mobile data 1H 2016 Unlimited pushes data usage to

tefficient AB www.tefficient.com 19 December 2016 1

Industry analysis #5 2016

Mobile data 1H 2016

Unlimited pushes data usage to

new heights

This is tefficient’s 14th public analysis on the development

and drivers of mobile data usage.

The usage continued to grow in 2016, but the growth

rates varied much between markets. Singapore, Japan,

Hong Kong and Hungary grew the slowest whereas

Lithuania, Turkey, Austria and Korea grew the fastest.

In Lithuania, Austria and Korea, premium unlimited plans

were gradually introduced in 2014 and 2015 and the

effect on data usage has been similar to what our

previous analyses identified for Finland and Latvia.

The data usage top list for January-September 2016 is

dominated by operators that offer unlimited: The world

leader DNA from Finland had an average usage per SIM of

9.9 GB per month.

High penetration of data-only SIMs explains high data

usage to a greater extent than 4G LTE.

But the effective revenue per GB matters most: In Finland,

average usage was 13x that of the Netherlands – where

operators effectively charged 14x more for a gigabyte

than in Finland. Other expensive mobile data countries

are Canada, Belgium, Germany and Czech Republic.


The average Finnish SIM used more than 7 GB per month in 1H 2016

Figure 1 shows the development of mobile data usage for 32 countries where regulators1 report mobile data

traffic.

The top countries of the world based on 1H 2016 stats were Finland, Korea, Sweden, Austria and

Denmark (which hides Austria in Figure 1). Based on full year 2015 stats, Latvia, USA and Estonia would

most likely also be top-ranked, but regulators in these countries don’t report half-yearly stats.

Figure 1. Development of mobile data usage per any SIM per country

With 7.2 GB per month per any SIM, Finland continued to lead the world in usage. 47% of all

Finnish SIMs (incl. M2M) had unlimited data volume in June 2016: Monetisation in Finland is

effectively based on throughput tiers and not on volume.

1 Exception: USA, where data is from industry body CTIA

0

1

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8

2010 2011 2012 2013 2014 2015 1H 2016

Gb

yte

s p

er

an

y S

IM p

er

mo

nth

FI LV KR 1) SE US AT DK IS EE IE 3) JP

2) AU NO SG CH HK CA PL 4) UK LT TR HU

IT FR ES DE PT NL RO CZ BE GR

1) Excl M2M2) Q2 20163) Traffic for last month each quarter

4) June 2016

AT


Korea passed Sweden in 2016 and is, based on available statistics for the first half, number two in the

world with 3.8 GB per SIM and month. The Korean operators started to introduce premium unlimited plans

in April 2014, see Figure 2.

Figure 2. Development of mobile data traffic in South Korea before and after the introduction of unlimited plans

Albeit premium, these unlimited plans aren’t without limits: Once the full-speed data allowance has been

consumed, the throughput is throttled to a few Mbit/s (exact speed depends on plan). Even with this

throttling, the effect on the mobile data traffic in Korea was immediately visible, see the arrow in Figure 2.

The mobile data traffic growth accelerated immediately after the introduction of these unlimited plans.

Another fast-moving country is fourth-ranked Austria. Usage

grew 56% from full year 2015 to the first half of 2016. The three

operators A1, T-Mobile and 3 (see picture to the right) are now all

offering unlimited data volume – where the price depends on the

throughput tier – in combination with home modems.

In contrast to Korea, where the focus in on handset data, the

Austrian use case is fixed network substitution. Noticeably,

the Austrian incumbent, A1, is also offering this.

0

50000

100000

150000

200000

250000

Dec

12

Jan 1

3

Feb 1

3

Mar

13

Apr

13

May 1

3

Jun 1

3

Jul 13

Aug 1

3

Sep 1

3

Oct

13

Nov 1

3

Dec

13

Jan 1

4

Feb 1

4

Mar

14

Apr

14

May 1

4

Jun 1

4

Jul 14

Aug 1

4

Sep 1

4

Oct

14

Nov 1

4

Dec

14

Jan 1

5

Feb 1

5

Mar

15

Apr

15

May 1

5

Jun 1

5

Jul 15

Aug 1

5

Sep 1

5

Oct

15

Nov 1

5

Dec

15

Jan 1

6

Feb 1

6

Mar

16

Apr

16

May 1

6

Jun 1

6

Jul 16

Aug 1

6

Sep 1

6

Mo

bil

e d

ata

tra

ffic

pe

r m

on

th [

TB

]

2G 3G 4G Auto-offloaded to Wi-Fi

Premium "unlimited" 4Gplans introduced


Also fifth-ranked Denmark is fast-moving. The usage per SIM grew 50% from

full year 2015 to first half 2016 with 4G LTE taking the lion’s share – we’ll come

back to that. Denmark doesn’t have plans with unlimited data volumes, but the

data buckets are generally very generous in Denmark, especially considering

Denmark’s low prices. 99 DKK (13 EUR) is e.g. giving 15 GB of data to

smartphone customers of 3’s sub-brand Oister.

A third example of the

unlimited mobile data

volume trend is Lithuania.

Although not as highly

ranked as Finland, Korea

and Austria, the country had

an impressive growth in the

average data usage of 66%

between full year 2015 and

the first half of 2016; the

highest of all countries.

The picture to the left

shows the example of Bite:

For 26.85 EUR, a postpaid

customer can get unlimited data volume – limited to the handset. The two capped plans shown (15 and 7

GB) are, however, to some extent also unlimited, though: Customers will get a number of services, including

Facebook, zero-rated for a period of six months.

As addressed in the 2015 version of this analysis, reasonabley priced plans with unlimited data volume have

also affected the mobile data usage in countries like Latvia, Switzerland, USA and the UK.

The countries with the lowest mobile data usage are Greece, Belgium, Czech Republic, Romania, the

Netherlands , Portugal and Germany – see the zoom-in in Figure 3. With the exception of Portugal and

the Netherlands, no 2016 stats exist for these countries, but it can be safely assumed that they remain in

the backwaters of Europe. Later in this analysis we will show that the high operator revenue per gigabyte

plays an important role in explaining this – at least in Belgium, Czech Republic, the Netherlands and

Germany.

http://tefficient.com/usa-latvia-and-finland-combine-high-mobile-data-usage-with-fast-growth/


Figure 3. Development of mobile data usage per any SIM per country – zoom-in on lowest usage countries

Even though usage levels are low, Figure 3 shows that there is growth in mobile data usage also in the

lower usage countries. Countries like Lithuania, Turkey and France show an increasing appetite for

mobile data.

But Figure 4 shows that the growth rates in many cases aren’t sufficient to close the gap on higher data

usage countries.

0,0

0,2

0,4

0,6

0,8

1,0

1,2

2010 2011 2012 2013 2014 2015 1H 2016

Gb

yte

s p

er

an

y S

IM p

er

mo

nth

FI LV KR 1) SE US AT DK IS EE IE 3) JP

2) AU NO SG CH HK CA PL 4) UK LT TR HU

IT FR ES DE PT NL RO CZ BE GR


4) June 2016


Figure 4. Mobile data usage vs. its development from full year 2015

Hungary and Portugal – alongside Singapore and Hong Kong – all demonstrated low growth rates in 1H

2016 even though data usage was low. In contrast, highest usage countries Finland and Korea had high

usage growth, leaving the lower usage countries yet more behind.

In previous analyses we have explained some of the low usage/low growth positions with public

Wi-Fi. It’s no longer obvious that Wi-Fi has that much of an impact. Countries where operators

have embraced Wi-Fi can be found anywhere in Figure 4. The Korean operators are e.g. some of the most

profound users of operator Wi-Fi, each having built hundred of thousands public Wi-Fi hotspots. The black

area of Figure 2 is also showing that the absolute level of mobile traffic that is auto-offloaded to Wi-Fi by the

operators is increasing. In spite of currently auto-offloading as much mobile data to Wi-Fi as the whole

mobile traffic of Norway (about 12000 TB per month), Figure 4 shows that Korea has a very fast growth in

mobile data usage.

Before finding other explanations, we will take a closer look at the data usage of individual operators.

FI

TR

IE

FR

DK

NL

AT

ES

NO

LT

2) AU

KR

1) SE

HKSG

3) JP

PT

4) UK

IS

HU

0

1

2

3

4

5

6

7

8

0% 10% 20% 30% 40% 50% 60% 70%

Gb

yte

s p

er

pe

r S

IM a

nd

mo

nth

Development in Gbytes per any SIM per month FY15-1H16

Mobile data usage grew fasterthan what can be expected

Mobile data usage grew slowerthan what can be expected

Expectation


4) June 2016


The customers of DNA top the world; used 10 GB per month

Our analysis showed that Finland is the country with the highest average mobile data usage per any SIM.

Figure 5 ranks the reporting or reported operators of the world. To be as updated as possible, the usage is

in most cases shown for the nine month period January-September 2016. Since not all operators or

regulators report quarterly, the period can occasionally be shorter.

Figure 5. Mobile data usage per any SIM and month – for reporting operators (or where the regulator reports it)

Figure 5 shows three tiers:

>2 GB per SIM and month

>0,5 GB per SIM and month

<0,5 GB per SIM and month

In the red tier, we find operators in maturing markets like India, Egypt and China – alongside a few

European laggards in Greece, Czech Republic and Germany.

9.9

8.6

7.8

0

1

2

3

4

5

6

7

8

9

10

DN

A, FI

Elis

a, FI

3, AT

*3, D

K (

1H

)

*Tele

nor,

SE (

1H

)

LG

Uplu

s, K

R (

Q2)

3, U

K (

June)

*3, SE (

1H

)

SK T

ele

com

, KR

*Telia

, D

K (

1H

)

3 E

uro

pe, G

roup (

1H

)

*Tele

2, SE (

1H

)

**Verizo

n, U

S (

Apr)

**Sin

gte

l, S

G (

Apr-

Sep)

M1, SG

(Apr-

Sep)

Pla

y, PL

*Telia

, N

O (

1H

)

*TD

C, D

K (

1H

)

*Tele

nor,

DK (

1H

)

Sw

issc

om

, CH

*Telia

, SE (

1H

)

Bouygues,

FR

eir M

ete

or,

IE

MegaFon, RU

3, H

K (

per

act

ive 3

G/4

G 1

H)

KPN

, N

L (

post

paid

consu

mer

reta

il)

Vodafo

ne, TR

Vodafo

ne, ES

Vim

pelC

om

, RU

**T-M

obile

, PL

*Tele

nor,

NO

(1H

)

Win

d, IT

Vodafo

ne, PT

**N

OS, PT

T-M

obile

, N

L

Vodafo

ne, IT

Ora

nge, PL

Movis

tar,

ES

Tele

kom

, D

E (

B2C T

-bra

nded)

Pro

xim

us,

BE

Vodafo

ne, U

K

O2, U

K

Vodafo

ne, D

E

TIM

, IT

Vodafo

ne, N

L

Ora

nge, BE+

LU

(excl

. M

2M

& M

VN

O)

Vodafo

ne, RO

O2, D

E

Chin

a M

obile

, CN

(1H

)

Chin

a T

ele

com

, CN

T-M

obile

, CZ

Vodafo

ne, G

roup

Chin

a U

nic

om

, CN

(1H

)

Relia

nce

Rco

m, IN

Vodafo

ne, EG

Vodafo

ne, G

R

Airte

l, I

N

Idea, IN

Vodafo

ne, IN

Gb

yte

pe

r a

ny S

IM p

er

mo

nth

Ja

n-S

ep

20

16 *) Based on regulator reported data

**) Per smartphone

2 GB per month

0.5 GB per month


In the other end of the scale – in the green tier – we find the

operators who have the most data happy customers of the

world:

With 9.9 GB per any SIM and month during the

January-September period, DNA was the reporting

operator with the highest mobile data usage in the world.

Postpaid unlimited data plans – where price is determined by

the chosen speed tier (e.g. up to 21, 50 or 300 Mbit/s) –

dominate DNA’s consumer offer. DNA won also our 2015 analysis, but has in 2016 increased the distance to

the world number 2:

DNA’s competitor Elisa had an average monthly usage per SIM of 8.6 GB for the first nine

months of 2016. Like DNA, Elisa’s consumer offer is dominated by postpaid unlimited data plans

where the “up to” speed determines the price. Both DNA and Elisa allow customers to tether their auxiliary

devices to the smartphone subscription.

3 Austria emerges as the #3 of the world of reporting operators. During the January-September

period, 3’s average SIM consumed 7.8 GB per month. As already mentioned, 3 (and its competitors)

provide Austria with fixed line substituting modems. Also the smartphone plans of 3 come with high data

allowances, though – albeit not unlimited.

The remaining seven positions of the top ten are held by other operators offering unlimited data: LG Uplus,

3 UK, SK Telecom – and half of the Danish and Swedish operators: 3 Denmark, Telenor Sweden, 3

Sweden and Telia Denmark.


Is data-only important for usage?

The bigger the screen, the higher the data consumption – right? Figure 6 gives strong support for this.

Generally speaking, countries with a high penetration of data-only SIMs – sitting in e.g. tablets, PCs,

modems – have much higher data usage than countries with a low data-only penetration. With 19.3% of

SIMs being data-only, Finland has the highest data usage in the world. Australia is, however, at 18.5%

with just 1.7 GB per SIM and month, but seems to be an exception.

Figure 6. Mobile data usage vs. data-only penetration

If looking at the bottom-left corner we note that countries without a developed data-only market – Turkey,

Spain, Portugal, France, the Netherlands and Belgium – all experience average usage below 1 GB per

month. To grow, it would make sense for someone in these markets to start addressing and monetise the

data-only segment.

AT

NO

1) SE

NL

IE

TR LT

2) AU

PT

FR

FI

ES

4) UK

DK

US

CZ

EE

BE

PL

IS

R² = 0,5673

0

1

2

3

4

5

6

7

8

0% 5% 10% 15% 20%

Gb

yte

s p

er

an

y S

IM a

nd

mo

nth

Data-only penetration of SIM base

1) Excl M2M2) Q2 20164) June 2016

1H 2016

FY 2015


Is 4G LTE adoption important for usage?

Three things are required to be an active 4G LTE customer:

1. A 4G LTE capable device

2. A subscription that supports 4G LTE

3. 4G LTE coverage

Maybe because of this complexity, few regulators report 4G LTE adoption. An attempt to correlate it with

data usage is still done in Figure 7 below.

Figure 7. Mobile data usage vs. 4G LTE adoption

The R2 value is – compared to the data-only graph – much lower. Korea is an example of that high 4G LTE

adoption drives high data usage, but Latvia had an almost as high data usage in 2015 with a much lower 4G

LTE adoption.

Figure 8 shows the few countries that currently break out the 4G LTE traffic in their reporting:

KR

FR

AT

SG

2) JP

1) SE

HK

LT

IE

DE

BE

EE

LV

ISR² = 0,257

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

0% 20% 40% 60% 80%

Gb

yte

s p

er

an

y S

IM a

nd

mo

nth

4G LTE adoption of SIM base

1) Excl M2M2) Traffic for last month each quarter

1H 2016

FY 2015


Figure 8. 4G LTE share of traffic – where reported. 4G LTE share of SIM as comparison – where available.

The sample is small, but suggests that 4G LTE SIMs in general carry a disproportionately high share of the

data traffic:

In Korea a 4G LTE SIM generated 1.3x the traffic of any SIM

In Sweden 1.4x

In Ireland 1.3x

That factor isn’t much if compared to data-only, though: In Sweden a data-only SIM

generated 3.3x the traffic of any SIM, in Iceland 5.5x, in Portugal 16.8x – but in

France just 1.2x.

Figure 7 might still suggest that 4G LTE adoption – too – is a factor that explains

data usage. But the correlation is weak. Note that Finland is missing out in Figure 7

(since 4G LTE SIMs aren’t reported). We believe that the 4G LTE adoption in

Finland isn’t above 40%. Having also Finland (with 7 GB per month) in the graph

would make the correlation yet weaker.

99%

88%

74%

68% 67%

60%

45%

73%

47%

34%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

South

Kore

a

Turk

ey (

Q2)

Denm

ark

Neth

erlands

Sw

eden

UK (

June)

Irela

nd

4G

LT

E s

ha

re o

f tr

aff

ic/S

IM b

ase

1H

20

16

4G LTE share of data traffic 4G LTE adoption of SIM base

Data-only adoption

is a far more

important driver of

high data usage

than 4G LTE

adoption


Effective revenue per Mbyte vs. usage

Now to the chart which tends to trigger the interest of policy makers. Figure 9 plots the total mobile service

revenue per gigabyte2 against the average mobile data usage per country.

Figure 9. Comparing total mobile service revenue per Gbyte with mobile data usage

The amber line shows where 20 EUR of ARPU is earned. Countries below it had an ARPU lower than 20

EUR; countries above an ARPU higher than 20 EUR. USA had the highest ARPU (39 EUR in 2015) and

Lithuania the lowest (6 EUR, 1H 2016).

If we just compare the countries for which 1H 2016 data is available, the Netherlands had the highest

effective revenue per Gbyte – 14x higher than the country with the lowest revenue – Finland. Based on

2015 data, also Canada, Belgium, Germany and Czech Republic had high effective revenue per Gbyte.

Looking at Figure 9 we can conclude – as in all our previous analyses on this topic – that the key explanation

for high mobile data usage is low effective revenue per Mbyte: Bigger data buckets lead to lower

revenue per Gbyte – which increases usage. At least when customers can use those big buckets also

on data-only devices; see Figure 6.

2 Attributing zero value to voice and messaging – which is also how most mature operators have priced service bundles when voice and

messaging are unlimited, but data capped on volume

NO

3) JPIE

AT

ES

KR

TR

PT

FR

2) AU

LT

NL

SG4) UK

DK

1) SE

FI

DE

US

EE

LV

BE

HK

PL

CH

CZ

IS

HUCA

IT

0

1

2

3

4

5

6

7

8

0 5 10 15 20 25 30 35 40 45 50

Gb

yte

s p

er

an

y S

IM a

nd

mo

nth

Total mobile service revenue per Gbyte [EUR]

20 EUR ARPU line


4) June 2016

1H 2016

FY 2015


The world’s largest mobile data carriers

Figure 5 concluded that DNA of Finland has the customers with the highest average data usage of the world

– 9.9 GB per month. But there are operators with significantly larger customer bases than DNA. Figure 10

ranks the reporting or reported operators of the world according to the total traffic carried between January

and September 20163.

Figure 10. Mobile data traffic – for reporting operators (or where the regulator reports it)

It shouldn’t surprise anybody that it is China Mobile – with 840 million mobile subscriptions – that leads

the world when it comes to petabytes carried. Even though China Mobile only reports mobile data traffic

originating from handsets, it is by far the largest data carrier even though Figure 5 showed that China

Mobile’s average usage per SIM was lower than 0.5 GB per month.

Based on a usage figure given for April, Verizon, the US market leader, comes in as number two of

reporting or reported operators. The South Korean market leader, SK Telecom, is number 3.

3 If only a shorter period is reported: Prorated to nine months. Operators with less than 90 Petabyte are not shown in the graph to

improve readability.

0

500

1000

1500

2000

2500

3000

3500

1)

2)

Chin

a M

obile

, CN

3)

Verizo

n, U

S

SK T

ele

com

, KR

MegaFon, RU

1)

2)

Chin

a U

nic

om

, CN

1)

Chin

a T

ele

com

, CN

Vim

pelC

om

, RU

4)

LG

Uplu

s, K

R

Airte

l, I

N

5)

3, U

K

1)

MTS, RU

Pla

y, PL

Elis

a, FI

Relia

nce

Rco

m, IN

6)

Tele

kom

, D

E

Vodafo

ne, IN

Idea, IN

Viv

o, BR

3, AT

DN

A, FI

Vodafo

ne, TR

Vodafo

ne, IT

Win

d, IT

Vodafo

ne, D

E

O2, D

E

TIM

, IT

Bouygues,

FR

O2, U

K

Vodafo

ne, ES

Movis

tar,

ES

Ora

nge, PL

Vodafo

ne, U

K

2)

Tele

nor,

SE

Sw

issc

om

, CH

2)

Tele

2, SE

Vodafo

ne, EG

2)

3, SE

Movis

tar,

CL

2)

Telia

, SE

Pb

yte

Ja

n-S

ep

20

16

1) Handset data only2) 1H prorated to 9m3) April prorated to 9m4) Q2 proprated to 9m5) June prorated to 9m6) If B2C T-branded usage applied to whole base


Russian operators are also ranked high – alongside other Chinese, Korean and the largest Indian operator,

Airtel.

The operator with the largest customer base in Europe – O2 Germany with 44 million subscriptions – is only

ranked as number 25, behind much smaller European operators like 3 UK (#10), Play Poland (#12), Elisa

Finland (#13), 3 Austria (#19) and DNA Finland (#20).


Conclusion

Mobile data usage is still growing in all of the countries covered by this analysis. One could expect

that the fastest growth – relative to the usage level – would be seen in low usage countries. On

the contrary, our analysis finds that growth is faster in higher usage countries where operators

have introduced unlimited (or very generous) mobile data propositions.

Even though the truly unlimited plan doesn’t exist – operators limit throughput, tethering, video

resolution, time or even volume – the notion of unlimited is obviously sufficient for mobile users

to change gear when it comes to data consumption. The Korean case is a good example: A high

mobile data usage country that started to use even more data when operators introduced

premium-priced plans with unlimited data volume – even though throttled to a few Mbit/s after the

cap. Noticeably this benefitted operator Wi-Fi as well: The mobile data that is auto-offloaded to

Wi-Fi by the Korean operators has never been larger.

Finland – where half of all SIMs have unlimited data – continues

to lead the world in mobile data usage. The Finnish operator DNA

is the operator in the world with the highest average usage – 9.9

GB per month.

Our usage vs. revenue per Gbyte chart shows a significant spread

in the revenue operators effectively earn per Gbyte. The most

expensive mobile data countries are Canada, Belgium,

Germany, Czech Republic and the Netherlands and – as a

consequence – mobile users in these countries are using very little

mobile data. The average consumption in Finland is 13x that of

the Netherlands.

The revenue per Gbyte is lowest in Finland, Latvia, Denmark,

Austria, Estonia, Lithuania and Sweden. Our analysis shows

that low revenue per Gbyte is the primary driver for high mobile

data usage. A high adoption of data-only SIMs is another driver

whereas 4G LTE adoption only has a weak correlation with data usage.

It is tempting for operators to make sure that every Gbyte costs and brings in good margin by

keeping bucket sizes down and prices up. This leads to a downwards spiral where operators

alienate customers, though – to find that their mobile behaviour becomes more and more Wi-Fi

centric. Since customer loyalty is what matters most to business results today – and the churn risk

is elevated every time a customer runs out of data – the operators in the countries with high

revenue per Gbyte need to become more generous with mobile data.

Is mobile data seen as too expensive to produce in significant volumes? Then incorporate operator

Wi-Fi as an integral, but not necessarily free, element in every mobile data plan.


International telco competitiveness specialist providing operators and suppliers with analysis, benchmarks and go-to-

market preparation. Expertise in quad-play, data monetisation, customer loyalty, Nonstop Retention®, mobile video, Wi-

Fi business models and high margin equipment sales.

www.tefficient.com

http://www.tefficient.com/

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Industry analysis #5 2016 Mobile data 1H 2016 Unlimited ...media.tefficient.com/2016/12/tefficient-industry-analysis-5-2016... · Mobile data 1H 2016 Unlimited pushes data usage to