Telcos and speed tiers

One of the motivations for the launch of RIS’s Next Generation Internet Index (NGII) in May this year was the bandwidth / revenue dilemma that telcos face (there’s a great chart in our July 22 blog). In Europe, bandwidth demand is growing exponentially but revenues have remained stagnant. To overcome this dilemma, telcos need to offer new products to grow the size of the market. If telcos don’t vary their product offerings, especially in saturated markets, they will continue to see declining revenues unless new-use cases are identified and new sets of products are offered. 

We can telcos doing exactly this by trying to persuade consumers to move up to a higher paying segment, by offering speed tiers on their 5G products. For unlimited packages, speeds are generally throttled. According to the latest Ericsson Mobility Report, 24% of operators offer 5G with speed tiers, up from 18% in April. So consumers that want unlimited data have to sacrifice speed, while those that require speed have to sacrifice unlimited data. We think that consumers are going to see greater product differentiation in the future from telcos, such as products with low latency or symmetrical broadband speeds. 

 Oct 2020Apr 2021Oct 2021Apr 2022Nov 2022
Number of operators offering 5G89124142154174
Number of operators offering speed tiers 2842

(Unfortunately, the Ericsson report doesn’t make the underlying data that they use public, so it’s very difficult to double check. Ericsson has this annoying feature where the table is downloadable, but not the underlying data).  

Other news from around Africa 

  • D.R. Congo and Vodacom: The government of the DRC have frozen Vodacom’s accounts in the country over a US$ 243 million tax dispute. We’ve been tracking the impact of some of the proposed taxes in the DRC in the past. This dispute has been a long time coming.
  • Starlink: According to Elon Musk, Starlink is losing money. Profitability is some time away. Starlink is part of SpaceX. It looks like a sustainable business model is still in question, especially as users report increasing congestion, lower bandwidth speeds and space for satellite orbiting the earth is more crowded. 
  • 2Africa: The submarine cable landed in the Western Cape in South Africa. The consortium consists of China Mobile International, Meta, MTN GlobalConnect, Orange, center3, Telecom Egypt, Vodafone and WIOCC and the capacity of the cable is 180Tbps.