Multi-Play Starts to Dominate on Europe’s High Streets

A Research Trip Shows How Selling “Packages” Is Becoming Commonplace on the Continent

Last week, I took some time out to compare how operators and retailers are advertising mobile services on high streets in Europe. A short trip across France, Belgium, the Netherlands and Germany revealed similarities and differences compared with the UK.

Here are my top four observations:

Multi-play dominates. The overwhelming theme was the prevalence of bundled packages of home Internet and TV in Europe. Pure-play mobile providers such as Mobistar in Belgium and T-Mobile Netherlands seemed behind the curve by comparison. It was often the provider’s TV service as much as its range of smartphones that first caught my eye in many stores, particularly those in France (see the Orange shop in Calais below as an example). This would have been unthinkable only a few years ago.

In contrast, the UK has been slow to embrace multi-play. I think this is mostly because BT, the UK’s former state-owned monopoly, lacks a converged offering like those of Orange or KPN. Indeed, until recently, Virgin was the only UK fixed-line operator with a significant mobile presence.

I’m keeping a close eye on BT this year — with 4G mobile spectrum and now an MVNO deal with EE, it’s likely to offer bundled services to the consumer market. This move would be sure to force rivals such as Vodafone and EE to step up efforts in their fixed-line businesses and would increase pressure on Sky to begin offering mobile services. However, a major challenge for BT is that it no longer has a high-street presence and this will restrict its marketing opportunity.

4G positioning is softer and more subtle. I expected to see a strong approach to promoting 4G similar to that taken by the leading UK operators, yet their European counterparts are more restrained, with only limited promotion in stores and through above-the-line advertising. This surprised me — most of the countries I visited are at a similar stage of network deployment and operators have also invested large sums to secure spectrum.

One reason may be that many operators in Europe are no longer charging a premium for 4G, typically bundling it into their packages for no extra fee. Alternatively, few outside France offer additional content on 4G packages like the UK providers. Vodafone in the UK, for example, has strongly promoted the inclusion of Sky Sports and Spotify Premium with its 4G plans.

Tentative moves into wearables. Mobile operators are making only cautious moves into wearables, despite industry hype. They are primarily testing the water with the Samsung Galaxy Gear smartwatch, which was on sale in most stores I visited, but are not promoting it strongly.

Unsurprisingly, Samsung and Apple devices dominate the shelves. Sony was also prominent, reinforcing its growing reputation in the smartphone market. Every operator I visited sold tablets, with a few offering a second, data-only SIM card to allow customers to share their smartphone allowance with an additional device. Sat-navs, smart radios, speakers, headphones, keyboards and fitness bands were also on sale in some mobile shops, reflecting moves beyond traditional mobile products.

Speed differential in tariffs. Many operators in the countries I visited differentiate tariffs on speed as well as data allowance. An entry-level 4G package with Vodafone in Germany caps speeds at 21.6 Mbps on its Red S plan, for example. The speed then increases for the higher-priced Red M and Red L tariffs.

A Vodafone UK 4G customer receives the same speed regardless of the package they subscribe to, with the operator simply positioning 4G as “six times faster than 3G”. EE is an exception in the UK, with a single speed-based differential: its standard 4G package is capped at 30 Mbps, while customers on 4GEE Extra (£3 more expensive) receive “double-speed”.

Mobile tariffs in Europe are stagnant and unimaginative compared with those in the US. I’d hoped to see some new concepts such as O2 Refresh or EE Swap, but there was little that was different or original. This might be because multi-play is beginning to dominate and operators are focusing hard on articulating their bundled offers.

My trip reinforced my view that tariff innovation is being driven by North America. In the US, shared data plans continue to perform well, and new concepts such as extended family plans from Sprint and Sponsored Data from AT&T are providing consumers with additional alternatives.