Tarifica has just released a report comparing mobile plan pricing in Germany to that in 11 other developed markets, mainly in Europe but also including the U.S. and Japan. The report, commissioned by Bitkom, Germany’s Digital Association, categorizes mobile plans according to six distinct user profiles and covers MNOs, MVNOs and MNO sub-brands. In ranking Germany within this landscape, the report also sheds light on the complexities of mobile pricing in general, as it currently stands.
In contrast to some other mobile price comparison studies, which claimed that Germany is a particularly high-priced market, Tarifica’s report shows that in fact, German mobile offerings are competitively priced across all the profiles and that Germany falls in the middle of the rankings, between 4th and 7th place among the 12 countries (the top ranking indicating least expensive). For every user type, Germany is less expensive than the U.S., Japan, Switzerland and Finland. For the light user profiles, German operators—MNOs, MVNOs and sub-brands—all provide competitively-priced offers within a fairly tight range, with MVNOs and sub-brands especially competitive as they target consumers with low demand for data, minutes and speed. For the heavier user profiles, German MNOs in particular offer value in the form of higher speeds, unlimited allowances and zero-rated data for specific purposes.
As for the rest of the countries, the study found that the cheapest prices across the six profiles were in Poland and Italy, while Japan, Switzerland and the U.S. had the most expensive. In Japan and the U.S., this is offset somewhat by an emphasis on family plans, in which costs go down as more family members are included.
Tarifica’s Take
Beyond its findings about German operators’ pricing, Tarifica’s study reveals some important truths about the nature of mobile pricing in general, the most meaningful ways in which to compare plans and important trends in pricing today.
Many other studies rely on a metric of “cost per GB,” but this way of looking at it obscures several important distinctions. Since mobile service offerings are multifaceted and users have radically different requirements when it comes to data especially but also to voice, a simple cost per GB analysis distorts the picture. A much richer and more useful description is based on breaking the consumer base down into usage profiles—in Tarifica’s report they are called, in ascending order from lightest to heaviest, “the Web Browser,” the Grandparents,” “the Average Joe,” “the Mobile Gamer,” “the Professional” and “the Digital Nomad.” While these names are symbolic, the pricing metrics based on these categories yield a nuanced picture of real-life usage, allowing for a meaningful ranking of services by price in relation to value.
As for trends, the report finds that operators are using three strategies to convert increasingly heavy data usage into ARPU—something that, especially in Europe, they have long struggled to do. More and more operators are offering unlimited data plans, particularly as 5G service is rolled out. They are offering faster download and upload speeds, and using speed as a differentiating factor in plan design and pricing. And they are zero-rating data for specific third-party apps or in-house services.
Together, these three strategies are intended to drive customers toward higher-end premium plans so that their data needs can be monetized. At the lower end of the usage spectrum, MVNOs and sub-brands help competition by providing lower-priced offerings to lighter users and leaving the MNOs free to pursue the above strategies at the higher end of the market.