Mobile service packaging trends
On a global scale, the types of service packages remain similar. However, a closer look reveals subtle differences in how offerings are packaged.
- In order to motivate consumers to move up through the tiers, 24 percent of 5G service providers now use data speed together with volume-based and unlimited subscriptions.
- Service-based connectivity packs are offered by 58 percent of all surveyed service providers.
- Of the surveyed service providers, 25 percent charge a price premium, compared to 4G offerings, with an average price premium around 40 percent.
A November 2022 update of an Ericsson study of retail packages offered by 310 mobile service providers worldwide shows that, although the type of service packaging remains quite similar globally, there are subtle changes in the way offerings are packaged. In the past months, many service providers have made notable design changes on their websites. Most are cosmetic, for example changing fonts, color schemes and restructuring the layout, but there is also a lot of promotion activity, especially time-limited discounted offers. A more significant change, which is likely designed to create some stability for the service provider during these uncertain times, is a move toward long-term contracts on SIM-only plans. This is common practice when plans include a device, but it is now being pushed by a large number of service providers in several regions on their SIM-only plans.
In most cases the websites show these plans with a preselected 12, 24 or even 36-month contract, usually with a small discount vs. the monthly contract. In some cases, service providers have added annual price adjustments of 4–5 percent to the contract terms.
Data buckets remain the default offerings for nearly all service providers. A common approach is to complement with “service-based connectivity packs” or an unlimited option at the premium end. About 43 percent of all service providers surveyed offer unlimited data under their premium packages. There is also a little shifting back and forth in this area, where nine service providers have removed their unlimited offerings completely since the previous survey, four of which have 5G services. At the same time there are 17 who have started to offer unlimited – most of these (11) are still on 4G. The net result is an increase of eight service providers with unlimited offerings.
Boundary conditions, such as not allowing tethering or limiting the use of IoT devices, is still common with unlimited offerings, but a lower percentage of service providers now apply these: 77 percent vs. 90 percent previously. One reason for this change may be the introduction of speed tiers which have become more common. In a lot of cases, speed for the unlimited offerings is set at a (for 5G) very low level, from a few Mbps up to 10 or 20 Mbps in some cases. This moves a part of the boundary condition to the actual offering and keeps the potential traffic levels somewhat in check.
The total number of service providers offering any type of service-based connectivity is 179. The number of service providers targeting data-intense services like video streaming, gaming or music streaming, has decreased to 120. These packs are still mainly sold as add-ons often found under a separate “tab” on the web site. Integrating them into the “customer journey” as a part of the process of selecting a subscription is still a rare practice.
The specific type of service-based connectivity pack that arrived during the pandemic, often called “work and education packs”, remains as an offering. These packs typically offer discounted GB to use for a combination of video conferencing services, streaming, office software suites and web browsing. These types of packages have now become quite common, especially in markets with somewhat lower income levels, mostly in South East Asia and Eastern Europe.
Extracting premium rates for 5G
The number of networks that offer 5G continues to increase and around 55 percent of the service providers surveyed have now launched 5G for smartphones. Of these, there are 25 percent who charge a premium for 5G, over their 4G service, with an average price premium of around 40 percent.
Using speed tiers to segment offerings
In our April 2022 updated study, it was found that 18 percent of 5G service providers used speed tiers for smartphones as a parameter for price differentiation. This pricing strategy is gaining momentum, and now 24 percent of those with a 5G offering use it to segment the market and motivate consumers to move up to higher-priced tiers. Around 74 percent of these service providers use speed tiers in combination with data buckets and 45 percent have a hybrid version (speed in combination with both buckets and unlimited data tiers). Four service providers with only 4G offerings use this practice as well.
As more and more service providers add speed tiers, the variation on the theme increases. The simplest form, where higher speed renders a higher price, is probably the most common. In many other cases the consumer can choose similarly priced packages with a higher speed and limited data allowance, lower speed coupled with a higher amount of data, or completely unlimited traffic. The speeds are not always clearly advertised, especially in the markets where rather low speeds are being offered with certain packages. In those markets, the higher-speed packages are simply announced as “full 5G speed”. In Western Europe, where most examples of speed tiers exist, they are often clearly articulated and come in large steps, with hundred(s) of Mbps.
Content aggregation and gaming attract consumers to 5G
It is common to offer bundles with various popular entertainment services included, such as television and music streaming or cloud gaming platforms. Around 45 percent of 5G service providers are doing this in various forms. The most common practice is to increase the bundle value as the price of the tiers increases. A new form of bundling is starting to emerge, where some service providers act as aggregators. In these cases, the service provider offers a menu from which the consumer can choose from a variety of streaming services, and sometimes events. Often this menu is available regardless of which tier you are on, and the consumer has almost complete flexibility in terms of the number of services to add. The most proactive service providers are adding these offers as part of the customer journey and may also allow adding and removing them on a monthly basis. The main benefits to consumers are that there is usually a small discount, compared to signing up directly with the cloud gaming provider for example, and the fact that all services are charged on one single bill.
Figure 14: Service providers’ new role as content aggregator
