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4G/3G/WiFi

Can Europe Cope With Unlimited Mobile Data?

Unlimited mobile data plans are gradually sweeping across the world, and Europe will not escape them. By offering data to users without restrictions, operators are placing an increasing burden on their networks. Unlimited data plans could even disrupt the user experience, as growing volumes of data lead to a slowdown in network speeds.

Operators should carefully consider the impact on both network performance and the subscriber experience when weighing up the pros and cons of opening the data tap. Unlimited deals offer many upsides, such as increasing ARPU (average revenue per user), stemming churn and attracting new customers. But these effects could be missed if networks are underperforming from a subscriber perspective.

Europe has long been an established 4G power with reliable LTE connections and relatively fast download speeds. And its users are making the most of it, consuming gigabytes of data every month in the spirit of ubiquitous connectivity.

A 2017 report by the OECD on mobile data usage found that European countries were among the leaders on average monthly data consumption. Finland led the ranks, where an average mobile user consumes close to 11 gigabytes per month, with Austria coming in second, at just above six gigabytes, and Sweden third, at 4.4 gigabytes. Of the top ten heaviest consumers of data, seven countries are located in Europe.

Mobile users are clearly hungry for more data. As operators in Europe eye the possibility of providing unlimited data, they can benefit from learning how operators in other regions have fared.

The unlimited data conundrum
In the US, we saw AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) introduce unlimited data plans just over a year ago, in February 2017. By the end of the summer, measurements showed customers of both operators experiencing the lowest average speeds of the year: Verizon’s speeds dropped by 18% and AT&T’s by more than 14%. Soon afterwards, download speeds gradually started to climb up again and, a year later, we’ve seen both operators regain much of the speed they lost in the first months following the introduction of unlimited data.

Meanwhile, one of India's most disruptive operators, Reliance Jio, is an interesting example of an operator experiencing huge data growth due to unlimited plans. Reliance Jio entered the Indian telecom market in 2016 with an aggressive and disruptive campaign which offered new subscribers a range of plans including free and nearly unlimited data. The campaign worked, and in a matter of months RJio had added more than 100 million subscribers to its network. The downside was that -- because users were competing for network capacity -- they faced lagging speeds. However, as soon as RJio built up a solid subscriber base and dropped the freebie plans, its speeds skyrocketed. We saw its average speeds jump by almost 50% in a matter of months.

Cushioning the unlimited blow
Europe has so far handled the increasing pressure on data well. Its LTE networks remain relatively steady and accessible. And while much of the world has seen 4G download speeds plateau in the past year, users in Europe are experiencing faster connections than ever. The continent also possesses some unique characteristics that could soften the blow of unlimited data plans for operators as well as consumers.

First, the price of mobile data (in comparison with the US, for example) is already relatively cheap, which means users (even those without an unlimited plan) are less worried about their data usage. While opening up the free flow of data will no doubt increase consumption, it seems unlikely to have as much impact as it has in the US.

Second, average 4G speeds in Europe are generally faster than in the rest of the world already. So even when the data surge inevitably hits download speeds, it is not likely to impact users as much.

Take, for example, one of the fastest countries in the world, the Netherlands, where T-Mobile Netherlands introduced unlimited plans in January 2017, followed by Tele2 Netherlands Holding NV in May. According to the Authority for Consumers and Markets (ACM), data consumption subsequently skyrocketed. But OpenSignal's measurements show that users in the Netherlands did not suffer from a noticeable slowdown in speeds following the introduction of unlimted plans.

Table 1: Average 4G Download Speeds in the Netherlands

November 2016 June 2017 November 2017 February 2018
33.84 Mbit/s 38.36 Mbit/s 38.91 Mbit/s 42.12 Mbit/s
Source: OpenSignal.

Preparing for the surge
There's no way around the fact that the dramatic increase in network traffic from unlimited plans has an impact on network speeds. But there are several steps operators can take to mitigate the effects. They can invest in capacity upgrades to their current networks, acquire further spectrum, or deploy fatter pipes and more cell sites. They can also choose to invest in newer-generation network technologies better equipped to handle the data surge. The unifying factor in all of these options is investment.

Whichever path they choose, Europe’s operators will be well served to properly prepare themselves for the 'open tap' of unlimited data, especially if they want to hold on to their comfortable lead in the global race for faster 4G speeds.

— Brendan Gill, CEO, OpenSignal

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