Pricing Mobile Broadband in Africa & the Middle East: The Search for the Secret Sauce
June 10, 2010
Mobile broadband is the fastest-growing segment of the Africa & Middle East (AME) telecom market, with subscribers expected to quadruple from 8.9m in 2009 to 37.9m in 2014. Meanwhile, data card adoption is growing as robustly in AME as it is elsewhere in the world. The advent of 3G in a region marked by low fixed-line penetration leaves no doubt that the AME market will clearly favor mobile broadband.
However, operators in AME must solve two serious problems if they want to rely on mobile broadband as the main driver of their future data revenue:
Modem/PC subsidies: Broadband devices are expensive, a fact that severely limits the size of the addressable market in AME. In overwhelmingly prepaid markets (the regional average was 88% prepaid in 2009), subsidies are extremely difficult to implement. As a result, operators appear to sell data cards and USB devices at cost or near cost.
Network congestion: Rising usage of mobile broadband goes hand-in-hand with greater drains on network capacity. Competitive pressures are fierce in much of Africa, so operators looking to maintain margins are increasingly shifting their focus from revenue generation to cost management.
According to our recent AME Insider, Mobile Broadband Pricing in AME: Strategies to Maximize Use and Minimize Congestion, operators in AME are still experimenting with many different pricing strategies to keep driving healthy growth in the mobile broadband segment, including how to satisfy the mobile broadband needs of the low-usage customer. Indeed how, and even whether, to meet the needs of low-usage customers is still very much up for debate.
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