Friday, December 16, 2011

LTE Prices Will Drop 60%

Mobile broadband services using Long Term Evolution will experience a substantial 60-percent decline in retail prices between now and 2016, according to Tariff Consultancy, on the way to gaining 250 million users worldwide by the end of 2016.

LTE Mobile Broadband Pricing 2012 evaluates pricing from around 30 fourth-generation LTE mobile broadband providers which are mainly located in Europe, North America and the Asia-Pacific regions of the world.

LTE is currently promoted as a premium product, with an average theoretical download access speed across all LTE providers is in excess of 80 Mbps, with the most common download speed cited being 100 Mbps.

Average monthly user data allowances for LTE Mobile Broadband services are currently 22 GBytes per month, but can be as high as 80 GBytes per month, with allowances for LTE operators in North America being typically far lower.

Alastair Brydon says the most expensive LTE tariffs are between EUR39 and EUR67 in numerous European markets. These services provide download speeds up to 50 Mbps to 80 Mbps, with a 30GB monthly data allowance. While these prices are higher than equivalent so-called ‘superfast’ fiber-to-the-cabinet (FTTC) fixed broadband services, there is not a huge price premium. LTE pricing

These tariffs correspond to a minimum price per gigabyte that varies between EUR1.78 (in Denmark for a 30GB data allowance) and EUR2.67 (in Germany for a 15GB data allowance).

The price per GB is generally lower than most HSPA mobile broadband services, where operators provide significantly lower monthly allowances in general. For example, in the UK, where mobile network operators are facing significant capacity challenges, O2 now offers just a single HSPA mobile broadband service, with a 1GB monthly allowance for £10.21, which corresponds to a price per GB of EUR11.49. This is around five times greater than the price per GByte of these LTE services.

TCL research finds that the average price worldwide for a top of the range LTE Mobile Broadband service is currently 50 Euro per month, typically based on a post-paid, 24-month contract term.

The study shows that the average LTE Mobile Broadband price in Euro per gigabyte ranges from 0.5 Euro (Tele2 Sweden) up to 9.9 Euro (Omnitel Lithuania) per GB of data mobile user allowance.

But already there is evidence of price erosion from selected LTE Mobile Broadband providers. Telstra (Australia) currently offers its BigPond USB 4G Mobile Broadband product with an 8 GByte  monthly data user allowance for the equivalent of 30 Euro per month, against 38 Euro for a 4 GB monthly data user allowance reported at the time of launch.

And in Singapore M1 (Mobile One) is offering its Next Generation Mobile Network equivalent LTE service to existing M1 customers with a 40% discount off the monthly list price.

Tariff Consultancy anticipates that LTE mobile broadband pricing will decline as more operators worldwide adopt the technology worldwide. LTE prices will respond to competition

That might be consistent with pricing trends for broadband access generally, in virtually all markets. But the local patterns might vary, one could argue. In the U.S. market, buckets of usage and typical speeds are relatively limited, compared to what seems to be offered elsewhere. 

That creates at least some possibility that pricing could increase, for some packages, in the U.S. market, particularly as family mobile data plans are introduced, or as some providers upgrade from “pre-LTE” networks to more fully-compliant LTE networks.

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