10 Aug 2012

Strategy Analytics reveals results of Spain mobile network pricing experiment

Strategy Analytics, US, has released analysis of a nationwide experiment carried out by mobile network operators (MNOs) in Spain.

PriceTRAX, an online price comparison database, monitored price fluctuations and the impact on connection volumes when MNOs tried removing the subsidies applied to contract-based smartphones.

“Movistar, Vodafone and Yoigo were the frontrunners in this experiment. Orange did not take part, possibly because their subsidies were already lower compared to its competitors," explains Phillip Kendal , director of the Wireless Operator Strategies service.

Movistar was the first to start removing subsidies on smartphones in Spain, which increased their handset prices by more than €100 in April 2012.

Vodafone and Yoigo followed in May, increasing their up-front handset price by 100%,” says Steve Entwistle, vice president of Strategy Analytics.

Kendal adds: “ When these smartphone handset subsidies were removed, it’s no surprise that Movistar’s gross connection volumes took an annual fall of 42%, while Vodafone saw a 36% reduction in Q2.”

The research shows that after the initial jump of over €100 in April/May, the average smartphone cost on a contract has since fallen back somewhat suggesting a softening of the MNOs resolve.

“If the experiment continues with other operators in different countries, PriceTRAX information will become more important than ever. It tracks retail pricing for handsets, dongles and tablets from 180 carriers from 50 retailers in 42 countries. The pricing information within it is updated weekly which provides an up-to-date market overview, vital to those competing in such a fast-moving industry,” concludes Entwistle.

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