Beginning on 11 January 2023, Movistar Spain (Telefónica) will add unlimited throttled data to the plans of all existing postpaid subscribers. Once a customer’s data allowance has been expended, they will be able to continue using data at no additional cost, with their download speed limited to only 2 Mbps.
According to the website Bandaancha, the new measure is designed to mitigate the negative effects of new year price hikes. Beginning on 13 January, Telefónica is set to apply price increases across its entire Spanish portfolio.
This news is likely a welcome respite for the telecom market in Spain. For most of 2022, Spanish mobile operators have been locked in a price war, with operators cutting prices aggressively in an effort to attract customers from the competition. This announcement that Movistar will be moving toward price increases is one of the first indications that hostilities may be lessening and 2023 could be brighter for all providers in the country.
One of the unavoidable outcomes of this price war has been that customers have become accustomed to an environment of perpetual deals: ever lower prices for ever greater value. As a result, Movistar, whose price increases will average at about 6.8%, knows it cannot simply raise prices without offering customers something in return. The offer of unlimited (even if throttled) data is Movistar’s attempt at mollification; whether it will work remains to be seen.
The greater danger of breaking out of the price war race-to-the-bottom is usually faced by the company that first attempts to pull up; competitors will be able to better tailor their own price increases to attract any customers shed by the first mover. In this case, Telefónica is not the only Spanish operator raising prices in the new year; Vodafone and Mas Movil have also announced that they will be implementing price increases in 2023, though the details of their plans have not yet been released. Perhaps they are waiting to see how Movistar’s price increase/unlimited data exchange goes before finalizing their own strategies.