Telefonica Germany Launches Speed-Based Unlimited Data Plans

Telefonica Germany Launches Speed-Based Unlimited Data Plans

Telefonica Germany announced the launch of a new set of O2 Free Unlimited tariffs, beginning on 4 February. The new plans are based on internet speeds. 

The O2 Free Unlimited Max offers unlimited data at the maximum available speed—up to 225 Mbps—for €49.99 (US $55.44) per month, while the O2 Free Unlimited Smart provides unlimited data at up to 10 Mbps for €39.99 (US $44.35) per month. These two plans are ready to be used for 5G, as well as 4G/LTE. The O2 Free Unlimited Basic plan offers unlimited data over 4G/LTE only, at speeds up to 2 Mbps, for €29.99 (US $33.26) per month. 

All three tariffs include unlimited calls and texts and EU roaming. They are also available in the Flex version, meaning that customers may cancel them at any time with 30 days’ notice by paying an additional €5.00 (US $5.55) per month.  

Tarifica’s Take

While most mobile tariffs base their data pricing structures on the quantity of data consumed, this suite of offerings from Telefonica Germany is unusual in basing it entirely on the speed of the data. Put another way, the operator is making a distinction between service tiers based on speed, while offering equal—indeed unlimited—amounts of data across all three tiers. This is interesting and potentially appealing in that it allows for all subscribers to O2 Unlimited service to have unlimited data, while still enjoying some freedom of choice as to their needs and the concomitant ability to keep the price down if desired.

The operator’s price structure is also designed to incentivize subscribers to take the higher tiers, given that a €10.00 (US $11.09) increase in cost per month gives one a fivefold speed increase from the bottom to the middle tier, while the €10.00 increase from the middle to the top tier delivers more than a twentyfold increase in speed. The plans are equal in other respects, with all three boasting unlimited calls and texts, as well as roaming in the EU.

In terms of how this offering will actually perform in the marketplace, one key question to be answered is how much users actually care about speed when it comes to mobile devices, or rather how much they care about this much speed, in the context of the coming of 5G. For a sizable contingent of users, 225 Mbps (download) will be overkill, so they will be content with 10 Mbps or 2 Mbps. For those users who really want or need 225 Mbps, 5G will be the way to go soon if it is not already, and with that ultra-high-speed service even higher speeds than that may be realizable. On the other hand, under the current offering even the middle (Smart) tier can access 5G, in which case the speed achieved may be much higher than 10 Mbps.

Another question is to what extent these speeds are notional rather than real. In other words, when advertising speeds “up to” a given figure, the operator may in fact be speaking of a best-case scenario that is rarely achieved. In any case, though, we feel that from a marketing point of view, the concept of distinguishing between unlimited-data offerings based on speed is basically a sound one.