Price development first half year 2008 - PTS-2008:21
27/11/2008
Prices for services within fixed telephony, mobile telephony and broadband remained relatively unchanged over the latest period compared with the rapid price drop we viewed in the market several years ago, particularly for mobile telephony. At the same time, however, the relatively tough competition in the retail market has made operators much more creative in terms of how they offer their services to customers. For example, PTS is concerned about the development of what are known as ‘hidden costs’ in terms of mobile call and data services. First and foremost, this applies to the charging interval, which is becoming increasingly long. PTS is currently working to draw up regulations regarding which information about prices, tariffs and general conditions that telecom operators must make readily available. The Agency is also working with Telepriskollen in this respect, in which connection charging intervals, opening charges and other hidden costs are important parameters.
One problem which has been discussed for some time now is the considerable differences between the stated transmission rates when broadband subscriptions are advertised and those actually received by customers. For this reason, PTS is pleased that a number of operators have now begun to state the rate intervals for fixed Internet access. However, some operators are still marketing mobile broadband in a traditional manner, using what are called ‘up to’ rates, despite the fact that mobile broadband is the form of access where the difference between the transmission rate measured and that claimed is the greatest. Rate intervals started to be indicated in Telepriskollen in October 2008. This also pertains to mobile broadband.
The price for the offering giving the lowest monthly cost for an average mobile user has not changed in the past year. However, for regular users, prices have fallen between four and nine per cent. Prices for mobile call and data services are generally dropping at a much slower rate now than a few years ago. Lower minute charges and lower SMS and MMS rates in many offerings are being counteracted by several ‘hidden costs’ being raised during the measurement period. This mainly applies to the charging interval, but also opening fees for subscriptions, opening charges and charges for paper invoices. It is also apparent that periods of notice have become longer in many offerings. On the other hand, the cost of making a call has dropped for travellers in Europe as a result of regulation of price levels for international roaming.
IP-based telephony has become more important in the sub-market of fixed call services. Previously it was the number of offerings for fixed telephony which increased, mainly in connection with the pre-selection reform implemented in 1999 and the launch of wholesale line rental in 2004. In the past few years, on the other hand, IP-based telephony has correspondingly increased the range of fixed telephony offerings. The lowest monthly charge for an average user of fixed telephony has risen by SEK 4.00 over the past year. For those making many international calls or calls to mobile telephones, however, the monthly cost of making calls has declined somewhat. The price in the market for traditional fixed telephony is largely controlled by Telia Sonera’s wholesale price vis-à-vis other operators since this limits the possibility of operators to reduce their retail prices.
The past year has not shown any price changes for the most inexpensive national subscriptions for broadband services with less than 2 Mbit per second, at least 2 Mbit per second, at least 8 Mbit per second and at least 20 Mbit per second. This comparison nonetheless includes only national suppliers of broadband services and consequently it should be emphasised that there are many local stakeholders offering broadband services, mainly in urban networks.
Mobile broadband has become an increasingly important service in the Swedish market and the services available are priced differently. The pricing models for mobile broadband are based on pre-paid cards or subscriptions and vary between offerings in terms of a fixed or variable price. The price for the most inexpensive offering for mobile broadband has reduced from SEK 220 per month to SEK 189 per month in the past quarter. However, it should be noted here that mobile broadband has only been included in Telepriskollen since late 2007. Mobile broadband is also mainly sold within the framework of various campaigns, and Telepriskollen only shows regular prices.
Also, it is becoming more common for operators to bundle electronic communications services. Bundling of several services has both advantages and disadvantages: First, the total price for the customer may be lower than purchasing the services individually, second, it may be an advantage to only have one supplier to communicate with. However, bundled services often have long lock-in periods and it may be difficult for consumers to compare prices between various bundled services. There may also be uncertainty about what applies legally if customers are dissatisfied with a service, for which reason the wording of contracts is especially important when concluding a package subscription. Here also regulations concerning which information about prices, tariffs and general conditions telecom operators must make readily available. PTS is also striving to develop Telepriskollen so that it is a useful tool for consumers when comparing various types of bundled services.