FOCUS: Cell operators to push with data offers, higher standards for data traffic

By Yekaterina Yezhova

MOSCOW, Feb 20 (PRIME) -- Russian mobile operators, whose revenue increasingly depends on the mobile Internet, are trying to gain momentum with new data-centered offers and higher connection standards to cash in on a 30% increase in data traffic in January–September 2016 and expectations of its further skyrocketing in 2016–2021.

“People more often surf the Web via mobile devices, like smartphones and tablets, instead of computers. Subscribers want to receive a high-quality and speedy Internet here and now. In January–September 2016, an average volume of traffic consumed by a MegaFon subscriber exceeded 4 gigabytes per month, up 30% on the year,” Yulia Dorokhina, head of mobile operator MegaFon’s press service, told PRIME.

“Traffic in MegaFon’s network is growing, and the trend will likely persist in the future. Mobile data traffic in our network increased 37% in January–September 2016. Internet penetration is expanding all the time. As of the end of September 2016, the LTE mobile Internet was available for over 65% of the country’s population, and LTE-Advanced with speed of 150–450 megabits per second to citizens of 25 cities.”

An average volume of traffic consumed in 2016 by a subscriber of mobile operator T2 RTK Holding, working as Tele2, tripled.

“The growth was possible not only by virtue of large-scale rollouts of 3G and LTE networks – which operate in 61 out of 65 regions of the company’s presence – but also of interesting product offers,” Konstantin Prokshin, head of the strategic communications department at T2 RTK Holding, said.

“We launched tariffs for limitless social networks, a separate offer of the unlimited Internet for regions, along with a great deal of various services for comfortable and inexpensive Internet access. We think traffic will keep growing in 2017 thanks to penetration of online broadcasting services, better quality of video content and a transfer of unused minutes and gigabytes under current tariffs.”

According to Cisco, mobile data traffic in Russia will rocket five times in 2016–2021, as the U.S. network equipment producer said in its recent global mobile data traffic forecast.

Researcher J’son & Partners Consulting said average traffic per an active user of mobile data transfer in the country amounted to 2.7 gigabytes per month in January–September 2016, up 30% on the year.

“Replacement of feature phones with smartphones and the evolution of high-speed networks are the main factors of the mobile data growth. In 2016, all leading operators offered tariff plans with the limitless mobile Internet, but already in 2017 they started rejecting such offers fearing network overload,” J’son & Partners Consulting senior analyst Alexei Tyrkov told PRIME.

Financial company UralSib Capital also paid attention to the fact that some players have already put an end to tariffs with the limitless mobile Internet. Data traffic transfer in mobile networks has been rising at high rates over the recent years, but operators’ incomes have stagnated, as it said in a February 13 research note.

For example, earlier this year, virtual mobile operator Scartel, known as Yota, stopped selling mobile data bonanza for smartphones, and VimpelCom, working as Beeline, offers no more limitless Internet in postpaid tariff plans to new clients in the Moscow Region, bringing top operators up to 40% of revenue. VimpelCom now has only prepaid plans with the limitless Internet.

Mobile traffic accounted for almost a quarter of VimpelCom’s mobile revenue in January–September 2016. Revenue from mobile data grew 20% on the year to 38.4 billion rubles, while the company’s mobile revenue stayed nearly flat over the year at 172 billion rubles. VimpelCom had 58.1 million customers as of the end of September 2016, including 35.8 million data users, according to the company’s report.

“The start of saying ‘no’ to tariff plans with limitless traffic could prove operators’ readiness to behave more rationally, which could reduce the degree of market competition,” UralSib Capital’s analysts said.

Prokshin at T2 RTK Holding said “on the whole we don’t plan to raise prices or reduce volumes of minutes and gigabytes in bundle tariff plans in the nearest time.”

Dorokhina at MegaFon said the operator constantly analyzes the market and adjusts price offers to stay attractive for clients and maintain business margins.

As to most popular smartphones, the key carriers of mobile data, T2 RTK Holding mentioned the Tele2 Mini, iPhone 5s and iPhone 4s.

“Over 75% of smartphones registered in MegaFon’s network run on Android, although the number of iPhone 5s devices increased 26% over a year. We see people buying LTE devices willingly. Their sales in our own retail almost tripled in January–September 2016,” the operator’s spokeswoman said.

In 2016–2021, 4G traffic will jump 12 times, and its share in the total mobile data traffic will rise to 89.7% by 2021 from 38% as of the end of 2016, Cisco said in the forecast.

Local VKontakte and Odnoklassniki were the most popular social networks last year in the mobile traffic of T2 RTK Holding, and among other popular applications were WhatsApp and Viber. VKontakte, Instagram and Odnoklassniki were leaders in MegaFon’s traffic.

Cisco said that smartphones will secure 86% of the whole mobile traffic in Russia by 2021. Video will account for 78% of mobile data traffic by 2021 as compared to 59% in 2016.

The number of portable devices will amount to 31.7 million by 2021, including almost 2 million equipped with cellular connection means, according to Cisco.

(57.6342 rubles – U.S. $1)

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