Business News

Wednesday 17 September 2014

The great Irish 
mobile data rip-off

Published 17/07/2014 | 02:30

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How much data do you use during the business day?

How much data do you use during the business day? If you don't know, you could be paying a fortune in unnecessary monthly data bills.

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I was reminded of this last week when I happened upon a neat little (Android) Irish app called Killbiller. It takes a quick look at your phone usage (calls, texts, data) over the preceding 72 hours and compiles a monthly estimate. It then cross checks your usage against published Irish mobile operator tariffs, giving you an idea of what your usage would have cost on competing plans from rival operators.

In my case, the results were revealing. My monthly usage was calculated at 625 minutes of calls, 292 SMS text messages and 12.7GB of data. When matched up against different mobile operator plans, the difference in monthly costs for my usage pattern was enormous. It varied from Tesco Mobile, which uses O2 Ireland's network, at around €25 per month to Vodafone at €95 per month. That's a difference of €840 per year.

In general, Irish business people use one of either Vodafone or O2. Perhaps coincidentally, these happen to be the most expensive networks for data use by some distance.

For example, the cheapest tariff that O2 has for 10GB of monthly data is €70, or €840 per year. And Vodafone, which is the biggest operator with the most billpay and business customers, charges €88 per month, or €1,056 per year, for 9GB of data. (And that is only if you carefully choose the right combination of add-ons in advance; it costs far more if you don't.)

Imagine, for a minute, that your fixed line broadband service cost €88 per month for a 9GB data limit. It seems absurd, doesn't it? And yet mobile devices are increasingly headed toward five-inch handsets that are designed specifically to accommodate services such as video-streaming, high definition web-browsing and other high-bandwidth activities. Moreover, so are 4G mobile networks, which operators are marketing as a must-have service.

So how long will business customers continue to pay €1,000 a year for a relatively modest amount of data?

To be fair, Irish phone users' average data usage is still just 1GB per month. But this is changing rapidly. At the launch of its fibre broadband service earlier this month, Vodafone chief executive Anne O'Leary revealed that its average Irish 4G customer now uses 1.5GB of data. If this is the 'average' user, the spectrum of use must incorporate a significant number of customers (like me) reaching up to 5GB, 8GB or 10GB of monthly data. In other words, we're not using BlackBerrys and older iPhones anymore.

There is already some evidence that the market is moving away from high-priced data operators. The last set of Irish market figures showed Tesco Mobile and 3 Ireland grabbing a sizeable chunk of market share from Vodafone and O2. It's no coincidence that both of these operators offer generous (15GB) monthly data allowances at reasonable (€30) monthly rates.

Half the country now owns smartphones. Mobile internet use is soaring. So €1,000 a year for 10GB of data isn't part of any reasonable business plan.

One could argue that Vodafone and O2 should probably milk it while they still can. In the days when operators here got away with charging 20 cents per 0.01MB text message or €5 per megabyte of roaming data (in Europe), both operators made a fortune. However, back then, customers either don't have competition to turn to or just didn't know any better.

But in a market with multiple operators offering competitive alternatives, these prices certainly won't last.

O2 customers will be an especially interesting test case. This week saw the legal completion of its acquisition by 3 Ireland. 3 Ireland has long had an 'all you can eat' (meaning 15GB) monthly data allowance for all of its customers. Will 3 Ireland automatically extend its 15GB data policy to O2 customers? Or will it say nothing, hoping to get a little of O2's froth before facing the inevitability of higher data allowances?

To be fair to Vodafone, there are some other reasons why business customers choose it over rivals. In my experience, it generally has better coverage than its competitors, particularly in non-urban areas. That's not to be taken for granted. For business users, it's essential.

Still, if it continues to maintain that 10GB of mobile data should cost €70 or €80 (or more) per month, it is on the path to steady decline. In an era where the phone is by far the most important web connected device we all use every day, few will pay that kind of tariff structure.

Right now, Vodafone is at a fork in the road. If it wants to maintain its superior market share, it has to lower its data prices.

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