'Consolidate' urge Europe's mobile telcos, but the numbers tell a different story

Europe's dominant mobile operators are urging regulators to allow more consolidation in the diverse (they would say fragmented) European mobile market, claiming the industry now needs to tap economies of scale to make up for flattening revenue growth. But the fact is that the European markets seem to be working best (for users and the Euro economy at large) where there are multiple operators competing vigorously.

A new study, by Finland-based consultancy Rewheel, shows that while rich countries' mobile citizens do best on cost and usage and users in poor countries worst, it's not just about GDP. There is another factor at work - those mobile markets which have lots of competition are doing far better than those that don't.

In fact Rewheel claims there can be a ten times difference in smarphone tariffs. Certainly, the most expensive tariffs are usually (but not always) in the EU's poorer member states where penetration of 'active' mobile broadband users is noticeably lower.

Rewheel analysed smartphone tariffs with a minimum of 2GByte of data volume and 200 off-net national minute allowance a month, across the EU27 member states. Costs ranged between €8 and €78 a month!

The key determinate, however, was not GDP but competition.

According to Rewheel:

Both the lowest prices and the highest mobile broadband user penetration were in countries where at least one “independent challenger” MNO was present, for example Sweden and Finland, or among the poorer member states e.g. Estonia, Latvia, Lithuania or Poland.

In Finland the mobile data consumption per capita is more than 2GB/month and in Sweden the average consumption of consumers using smartphones has exceeded 1GB/month in the first half of 2012.

The lowest available prices in the 13 most “protected” markets (i.e. no challenger), were on average 140% higher than in the rest of the EU27 markets. The lowest available prices in those 15 member states which had only three (or two) MNOs were 46% higher than in the 12 markets which had four active MNOs, found the study.

The most “protected” markets, with highest prices and lowest mobile broadband user penetration, are the ones where, on the one hand, there is no independent challenger MNO and on the other hand one or more of the active MNOs belong to the “E5 Group” (Vodafone, Deutsche Telekom, France Telecom, Telefonica and Telecom Italia).

“The digital transformation of economies and societies is one of the main drivers of economic recovery of the European Union. Smartphones represent the personal vehicles and their tariff plans the fuel of this transformation. But while in the member states with most progressive mobile markets an average citizen can use its smartphone for less than 1% of its net wage income, in the poorest member states it would need to pay as much as 10%-17%, which is clearly unaffordable for the masses,” said Antonios Drossos, Rewheel’s managing partner and co-author of the research report.

“It is our conviction that unless European and member state authorities take the necessary corrective measures, poorer member states, which are mostly affected, will underperform their wealthier peers in digital and overall economic competitiveness and growth.”