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Mobile Pricing Trends: International and SIM-only Packages

As the market for mobile telephony has matured and become increasingly competitive and, as MNOs' understanding of customer needs has developed, the basis on which MNOs compete has changed. Historically, MNOs competed on a simple 'price versus brand stature' trade-off, where incumbents with well established brands tended to be at a price premium and new entrants competed on better value tariffs expressed through easily-understood elements such as large minute and text allowances. More recently, as these differentials have been competed away by incumbent pricing aligning with new entrant pricing, more agile MNOs have looked for new battlegrounds in the fight to acquire and retain high-value customers.

Two such areas - examined in depth in this report - are international tariffing (defined as placing calls to international destinations from the customer's country of residence, distinct from roaming) and postpay SIM-only packages. Each of these can attract and improve retention of high value customers: both demand careful proposition design and a relatively high level of engagement from the customer (in terms of understanding of the benefits to them) for the MNO to benefit.

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Table of Contents


1
OVERVIEW
1
2
INTRODUCTION
2
2.1
Background to the Report
2
2.2
Report Content
2
2.3
Currency and Conversions
2
3
INTERNATIONAL CALLING IN THE UK
4
3.1
UK International Calling: Fixed and Mobile Market Background
4
3.2
International Direct Dial Calling Propositions From UK Mobile Operators
6
3.2.1
O2 International Calling Propositions
6
3.2.2
T-Mobile International Calling Propositions
7
3.2.3
Business Risks and Benefits of International Calling Propositions
10
3.3
'Free Skype Forever' Proposition From 3
11
3.3.1
Proposition Background And History
11
3.3.2
New 'Free Skype Forever' Proposition
12
3.3.3
3's Strategy
12
4
POSTPAY SIM-ONLY
14
4.1
Introduction
14
4.2
SIM-only
14
4.3
Irish Market Background
14
4.4
Prepay And SIM-only Postpay Packages By Operator
16
4.4.1
O2 Ireland
16
4.4.2
Vodafone Ireland
17
4.4.3
Meteor
18
4.5
3 Ireland
18
4.6
Financial Impacts Of SIM-only and Hybrid Propositions
19
4.6.1
Monthly Gross Margin Estimates
19
4.6.2
Customer Lifetime Value Estimates
20
4.6.3
Conclusion
21
4.6.4
Footnote: Modelling Assumptions
22
5
INTERNATIONAL AND SIM-ONLY IN OTHER COUNTRIES
23
5.1
International Calling In Spain
23
5.1.1
Vodafone
24
5.1.2
Movistar
24
5.1.3
DialAbroad
24
5.1.4
Commentary
25
5.2
SIM-only In France
25
5.2.1
SFR
25
5.2.2
Orange France
26
6
RECOMMENDATIONS
28
6.1
International Tariffing Recommendations
28
6.2
SIM-only Recommendations
28