Getting the price right for data plans can be perilous

A top German telecoms executive recently told me that German consumers tend to be cautious in their approach to new technology, and are on the slow side when it comes to adopting new devices, services and so on.

Meanwhile, a recent report issued highlighted that German consumers pay among the highest prices for mobile data in the Europe Union, so you can understand why they are not exactly rushing out to buy high-usage data devices such as tablets!

According to what looks to be an extremely comprehensive report by Finnish consultancy Rewheel, mobile operators charge over 3 times more for a gigabyte of data in Germany than in the UK and up to 15 times more than in Finland. For data- only tariffs for laptops and tablets, on average, a gigabyte costs €6 in Germany, €4.5 in the UK and as low as €0.7 in Finland, the report said.

These are fairly damning statistics for the German market, and are blamed on the market's dominance by four large multinational operators--Deutsche Telekom, Vodafone Germany, Telefónica's O2 Germany and KPN's E-Plus--with no "challenger" network operator such as Hutchison Whampoa's Three to upset the balance and drive down prices.

Indeed, Rewheel has previously highlighted how "maverick" operators are needed to drive down prices within a national market. High prices are inhibiting mobile data adoption in Germany, the firm said, and also noted that the utilisation of Germany's spectrum resources is over ten times lower than the level observed in the most progressive EU member states, like Finland.

The Rewheel report emerges as the EU's Neelie Kroes steps up efforts to create a single telecoms market for the 27 EU states in order to benefit from economies of scale, and create cross-border pricing for users.

"Will the German model serve the best interest of consumers and business in other EU member states? In Rewheel's opinion clearly: NOT," the company said.

Certainly, operators need to make money from their services, but pricing that inhibits the adoption of services is not going to serve the interests of market growth.

How to price LTE services is also currently much in focus due to the varying approaches of operators towards adding a premium to the higher-speed services. As you might expect from its "maverick" reputation, 3 UK has said it will not charge a premium for its LTE services when they are launched later in the year. Of course, a premium price would have to be supported by a good enough network, and that is why EE thinks its premium is sustainable; the UK operator believes its LTE network will continue to offer a superior experience for some time to come.

Nevertheless, analysts and industry executives I've recently spoken with view premium charging at best a short-term approach. Indeed, the look of incredulity on an Oracle executive's face when I mentioned EE's premium strategy was a sight to behold.

It's a difficult balance to get right, and I don't envy the task of pricing strategists at operators.

A final bit of pricing news this week may have brought some cheer to Europe's operators, however. According to Wireless Intelligence, prepaid is plateauing as a percentage of overall connections and is expected to contract in Europe in the coming years. That means more subscribers moving over to higher-value contracts that also tie them in for six to 24 months.--Anne

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