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Therefore, the operators can earn a fortune from your mobile surfing

The time when the mobile operators made a fortune from SMS traffic and offered subscriptions with unlimited surfing feels more and more distant. In recent years, SMS revenues have remained stable at just under 2.5 billion a year, while data revenues instead reach new record levels every year.

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As a direct result, today all of Sweden’s four major operators have data caps of different sizes on all their subscriptions – the more data you need, the more expensive it becomes. And those who have used up their data and want to buy extra will be met with significantly reduced prices compared to the regular subscriptions. For the consumer, in other words, it costs a lot to surf via mobile phone or with a mobile broadband.

When PC for All talks to Rickard Dahlstrand, project manager for Bredbandskollen, he believes that there are good reasons to question this model.

The broadband college
Rickard Dahlstrand, project manager Bredbandskolen, thinks it is strange that all Swedish operators work with the same model. Photo: Sara Arnald

– Already over ten years ago, the operators noticed the threat from services such as Skype and Whatsapp and saw that they needed to do something so that their business would not be completely destroyed. They basically decided overnight to completely change the model and went from charging for a certain speed to selling data in volume. That in itself is strange because in Sweden we have a unique position with four large operators on the market. Then it would be reasonable for at least someone to stand out with different conditions, but instead it seems they have agreed to keep the ceilings for data low, says Rickard Dahlstrand.

More generous subscriptions with neighboring countries

When we ask the operators why it looks the way it does, they claim that it is partly about calculating investments in the networks and partly about being able to secure the capacity in the networks.

At the same time, all operators are in some form active in at least one of our neighboring countries – and there it looks completely different. In Finland, a large part of the subscriptions come without any data cap at all, and in Denmark, customers get significantly more data for their money than what we get in Sweden.

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Rickard Dahlstrand explains the situation with classic market thinking. As all four major operators have chosen the same solution in Sweden, it also becomes obvious to the customer that there should be relatively low data caps.

– In Denmark, the operators say that you should be able to use their services together with Netflix, and there can even be such a subscription included. And if you look at Telia in Finland, they don’t suffer from releasing the data. With that in mind, it’s hard not to question that here in Sweden, people have been able to go from a free surf to significantly more restrictive subscriptions.

So what effect does this have? After all, Sweden has an expanded mobile network, and it is unlikely to get any worse in the future – with major investments in the upcoming 5g technology. At the same time, data-intensive services such as streaming video are becoming increasingly popular.

– Many users today have incredibly good coverage and technically it is possible to use mobile broadband as a replacement for a fixed broadband. In practice, however, it will be difficult, because it risks being far too expensive. Of course the operators make good money from it, but they are also putting themselves out of business because they do not create the conditions for companies to develop new services, says Rickard Dahlstrand.

He believes that the development, or rather the lack of it, means that the consumers will end up in a pinch.

– If a feature film on Netflix costs around 1 GB for approximately one to two hours, then the number of hours will not be very many with the current ceiling. If there were subscriptions with 250 GB that had been priced roughly the same, mobile broadband could have been an alternative to fixed broadband. But we are certainly not there today.

This is how the operators explain their data caps

We contacted Telia, Tre, Tele2 and Telenor to try to get an answer to the question why the data is so sparingly increased.

Why don’t you offer free surfing in your subscriptions?

Inger Gunterberg, Telia

Inger Gunterberg, Telia’s press unit: The technological development in mobile telephony has been incredibly fast in recent years. Telia offers different packages with different amounts of data so that our customers can choose the one that exactly suits their needs best. The trend we have seen for some time has been to include more and more data in the subscription, but now we see that many operators, for example in the USA and Asia, are launching services where certain types of data traffic or traffic related to specific services are not counted among the customers’ consumption. We may also see more of this trend in Europe in the future.

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Kamran Almedar, Three

Kamran Alemdar, PR and information manager at Tre: We need to put ourselves at a level that the customer is willing to pay for and where we can be competitive at the same time. There were open subscriptions in the past, but the way we use mobile phones has changed a lot in recent years. Our pricing is also about being able to calculate the investments made.

Henrik Lönnevi, Tele2

Henrik Lönnevi, head of product and business development at Tele2: When we had subscriptions with unlimited data, a few users accounted for the majority of the capacity. But mobile data is a shared resource, and this is a good way to distribute resources more fairly.

Aron Samuelsson, Telenor

Aron Samuelsson, press manager at Telenor: The reason why data is not free is above all so that we can make the necessary investments in the network. We in Sweden have somewhat special conditions, with few people on a large surface and a large part of the population in the countryside.

If we look in Finland and Denmark, it does not look the same. How is it that we in Sweden get so much less data for the money than our neighboring countries?
Inger Gunterberg, Telia: Each country has different conditions in terms of customers’ needs and behavior in the use of mobile services. Even the competition between the operators in the countries differs and overall this has contributed to the fact that the business models can look different from country to country.

Kamran Alemdar, Three: If we look at Denmark, for example, it is a completely different market with legislation that set a cap on the six-month commitment period, which means that operators do not have the same scope to subsidize phones as we do here. Then the geography looks different, it is a different cost to build networks. We have approximately 4-5 times more base stations in our network in Sweden than we have in Denmark.

Henrik Lönnevi, Tele2: We believe this model provides a better customer experience. We did a big repackage in February where we made all the data swaps bigger and introduced a bigger jump between them. We recommend 20 GB, there are many who manage on 5 GB, but as services and phones develop, more data is also consumed.

Aron Samuelsson, Telenor: In Denmark, where we also have operations, the prices of data are on the way up and there they also do not work with subsidized phones in the same way.

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The extra data is much more expensive than the data included in your subscription. Why?
Inger Gunterberg, Telia: The various services with extra data that the customer can purchase are adapted to meet our customers’ needs for data when, for shorter periods, they need to expand their data pot included in the subscription. These extra data pots vary from 1 GB up to 200 GB depending on the subscription form and product type (mobile telephony and mobile broadband). So extra data does not have to be more expensive compared to the amount of data included in regular subscriptions, but depends on how much you buy on each occasion and how long the data is valid for.

Kamran Alemdar, Three: Pricing is somehow about calculating investments and at the same time being attractive. If you have reached the ceiling several months in a row, you probably have the wrong subscription.

Henrik Lönnevi, Tele2: The important thing for us is that the customers have the right amount of data. It is better and easier to update instead of buying more things. The data in the subscription also becomes cheaper the more data your subscription has.

Aron Samuelsson, Telenor: What we recommend as a customer is to upgrade your subscription if you need more data. It’s something we prefer you do over buying loose weight. For us, extra data is also an administrative expense.

Is it possible to get by on just one mobile subscription as a customer, or should one see such a thing more as a supplement to a regular broadband?
Inger Gunterberg, Telia: It is up to each customer’s individual needs. For more traffic-intensive services such as streaming video in a home environment, we recommend supplementing mobile solutions with a broadband solution in the fixed network.

Kamran Alemdar, Three: It is extremely individual. There are those who consume a lot more, while the data is more than enough for others. We are constantly seeing an increase and we have adapted and developed products that offer quite a lot of data. But we have some customers who use exclusively mobile broadband.

Henrik Lönnevi, Tele2: It depends entirely on usage patterns. For many households it is sufficient, but if you have three children who watch Netflix a lot, I would recommend fixed broadband.

Aron Samuelsson, Telenor: The mobile network should not be seen as a substitute for the fixed network but as a complement. For those who want to stream movies, we recommend the fixed network. Then it is important to point out that data caps have gone up in recent years.

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