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Tuesday, March 04, 2014

Bargain Pricing on 4G LTE in Some Competitive Markets

If you thought that you'll likely have to pay more for the best mobile network service offering, then think again. According to the latest global market study by ABI Research, more than 55 percent of the least expensive country tariff plans are now on 4G LTE technology -- that's compared to just 22 percent a year ago.

This performance has been driven by the aggressive deployment of LTE-based mobile networks and a wider choice of consumer-centric LTE smartphones.

"However, we found that the average cost of mobile Internet tariff plans across the cheapest 20 markets increased by 8.24 percent between Q1-2013 and Q1-2014," said Marina Lu, research associate at ABI Research.

While 55 percent of the 20 cheapest country plans were 4G, these 4G tariff plans were only marginally more expensive than 3G tariff plans. One year ago, the 4G data pricing was around 20 percent higher than 3G for the equivalent data-plan.

What's happening here? ABI believes that competition is already forcing the mobile network operators to pare down the prices of even their 4G tariffs.

The current 4G service adopters are bigger spenders than their 3G and 2G counterparts, and mobile operators are keen to lure across these upgrading 4G subscribers, but carriers should not over-shoot in their tariff plan reductions.

For example, in the French Market, a price war was initiated by Free Mobile providing a low-cost 4G package as a competitive response to Bouygues Telecom.

Bouygues Telecom had triggered the price war when it announced that 3G subscribers upgrading to 4G would continue to pay 3G prices. ABI says that savvy mobile carriers should be getting an ARPU boost from 4G and should not be in a race to bargain basement prices.

LTE Multi-device Shared Plans are one solution that does boost ARPU. In many markets, in-country voice dialing and text messaging have become heavily commoditized.

Market leading mobile network operators -- such as Vodafone, T-Mobile, and Telefónica -- now offer unlimited text and voice for their mid and high tier data quota plans.

This type of Multiple Tiered Data Tariff now represents 46.7 percent of all tariff plans. Multi-device Shared Plans are starting to gain traction in the market as they now represent 8.3 percent of tariff plans -- growing at 38 percent quarter-over-quarter.