Mobile service packaging trends

An updated Ericsson study[1] of retail packages offered by 308 mobile service providers worldwide shows a continuing shift toward 5G being the standard choice for consumers, especially in high-ARPU markets.

5G SA has been implemented in around 50 networks worldwide. Service providers are promoting it in markets where it is being rolled out, calling it 5G+ in their data plans. In some markets, service providers are starting to make use of the capabilities that 5G SA enables by offering differentiated connectivity services. Some of these services are offered on Fixed Wireless Access (FWA), where minimum speeds or broadband connectivity quality on par with fixed broadband are being guaranteed.

Another area targeted with differentiated offerings is uplink-related connectivity, for example, services used for live broadcasting or streaming. Such services are aimed at professional and national broadcasters, or influencers in need of a more stable uplink for sharing their content on social media platforms.

Some form of data buckets are available from around 99 percent of the surveyed service providers, while around 48 percent offer one or more unlimited data plans to their users. The regional differences are significant and Western Europe has the most, with 89 percent of service providers having unlimited offerings as part of their plan structure. It is also around three times as common to have unlimited plans among the service providers who have launched 5G compared to those that still only provide a 4G service, 64 percent versus 22 percent.

Regular changes to plans are common and can sometimes involve major restructuring. Our research shows that one popular trend is minimizing the number of available plans, or changing every plan to include 5G. A reason for these changes may be to simplify the structure and minimize costs associated with overly complex plan catalogs. Another reason can be attempts to gain market share or increase ARPU; with fierce competition in most markets, service providers are closely watching each other, and often copy each other or find other ways to try to mitigate any major effects on market share or revenue.

Unlimited data plans do not drive market share

One of the more significant changes a service provider can make to their offering structure is the introduction of unlimited data plans. Once that step has been taken there is no higher tier, based on data buckets, that can be offered. Data traffic can grow indefinitely without adding to revenue, and segmentation must be made using additional parameters and criteria. These could include using speed as a differentiator or offering additional content or value adds. The motivation for introducing such plans has often been to drive up user growth and data usage.

One interesting question is if the introduction of unlimited plans, by one or a few service providers, will have a noticeable effect on their subscriber market share. By correlating service packaging data collected twice per year since the beginning of 2019 with reported financial data from the same time up to Q4 2023, it is possible to see some trends.

Western Europe (17 larger markets) is the region with the highest use of unlimited data plans. A total of 41 service providers in 12 markets have been grouped and named based on when (in which quarter) unlimited plans were introduced, and each groups’ combined market share development has been plotted from 2018. Five markets were excluded from the analysis, since either no relevant changes happened during the period or all service providers launched unlimited plans within the same half-year period. However, this analysis does not reveal any clear pattern, as shown in Figure 14.

The dots mark the quarter in which unlimited data was introduced, and only four service providers – Group 2 (Q2 2020) – showed any sustained growth after they launched unlimited plans. The three service providers making up Group 5 (Q4 2021) saw market share growth long before they introduced unlimited. All other service providers are showing flat or declining market share numbers, both before and after the introduction of unlimited. Looking at the numbers at this aggregated level, service providers who never introduced unlimited plans seem largely unaffected by what the others are doing. Their market share development is similar to the group which were first to introduce unlimited plans.

In addition, when studying revenue growth for these groups, the ones that have not introduced unlimited offerings are showing the strongest revenue growth, together with one incumbent service provider that launched as late as Q4 2021.

A closer look at the market

In most markets in Western Europe, as is often the case in other regions, it takes less than one to one-and-a-half years after the first offering was introduced for competitors to follow with similar offers. Effectively, this means that unlimited offerings are no longer a differentiator, meaning other factors are taking over as the main contribution to market share.

There are, however, six markets where one or more service providers introduced unlimited plans either more than eight quarters after the first, or not at all. Looking at these markets individually, we see almost the same pattern as before. Only in one market does the first service provider to introduce unlimited show any sustained growth starting shortly after they launched it (see Figure 15). In four of the markets, the results are reversed, and the first to introduce unlimited is losing market share. In one market, the increase in market share started 2 years after the introduction and therefore can’t be attributed to the change in offering.

In conclusion, market share is the result of a number of variables, and it is likely that several other factors have a more significant impact on market share numbers; constant changes are being made to price levels and marketing messages, as well as to service packaging, and many or most changes are being challenged and countered by the competition.

More differentiation to increase revenues

In the previous report, it was found that there is little to no differentiation between offerings available to consumers when looking at each individual market.[2] Any changes in market share for an individual service provider in mature regions like Western Europe simply mean that subscribers are moving between the providers. The total market size is not changing, and when competition tries to mitigate these changes, the end result can in reality mean that the combined revenue is decreasing and the market is shrinking. Given the results shown here, there may be merit in exploring new ways to address the needs of the users that can provide a sustainable result, especially in terms of increased revenue, most likely by providing far more differentiation than the studies show is currently being offered.