Thursday, July 21, 2011

KPN's new mobile tariffs bode ill for market share

KPN has announced new tariffs (from September 5) for its KPN and Hi brands on the Dutch mobile market (Telfort will follow at a later date), in response to the new Net Neutrality laws and decreasing revenues from voice and SMS. For our views on NN, see this post and this commentary.

It appears as though the new tariffs may need some tweaking:
  • There is one bundle for voice, SMS and data. This is not what consumers want, now that voice/SMS are being replaced by data.
  • If you buy more minutes/messages, you automatically buy more bits as well. Again, and for the same reason, this is not what consumers want. They want an inverse relationship, or even better: the ability to pick amounts separately.
  • Nobody knows what an MB is, how much MBs are spent on a video clip, etc. Moreover: usage may vary wildly from month to month.
  • Speeds are quite slow, not just the downlink (for some reason KPN's upper limit is 7.2 Mb/s, whereas other HSPA operators worldwide have arrived at 42 or even 84 Mb/s). At 0.1 Mb/s, the uplink will surely frustrate those trying to send an MMS.
  • Both brands are now offering no fewer than 24 different subscriptions.
  • The overage fees may not appear to be unusual, but in light of this, they are rather high for data. And KPN's 35 c/min for out-of-bundle minutes appears to be another rip-off, best to be avoided.
In fact, it looks like there is very little right about these new tariffs. Take a wild guess what will happen next to KPN's market share. And share price (down over 20% since the recent Investor Day). Add to that: deep trouble on the business market and a write-down coming for the shares bought back during the quarter.

The Q2 results are due July 26. We recommend you stay in bed and keep the curtains closed. That's what the marketing people did when they concocted the new tariffs.

Tuesday, July 19, 2011

The RS-DVR issue comes to Europe

My friend John Goedegebuure unearthed a new service from KPN: Opnemen Pakket ('recording package'), basically an RS-DVR service, comparable to Cablevision's cloud-based service.

  • 5 EUR/mo (free for Premium subs)
  • max 6 simultaneous recordings
  • initiatiate using red button or EPG
  • max 200 hr in SD quality (or 100 in HD)
  • max 32x fast forward during playback
The new service could undermine catch-up TV, since recording is made very easy. It could also undermine the advertising models that underpins both broadcast and catch-up TV, because ad skipping is made very easy as well and because the service (presumably) doesn't have pre-rolls.

At the same time, KPN has found a new revenue source. Obviously, that may not sit very well with the content industry. John also found a verdict from the Oberlandesgericht in Dresden, in a case brought forward by RTL Germany against Save TV. It basically says: Save TV is allowed to offer the service - but needs RTL's consent.

Conclusion: in Germany, the content industry prevailed. What will happen next in the Netherlands? RTL Netherlands apparently hasn't taken action yet, but based on the German verdict, it may ask KPN to end its RS-DVR service. The way out then appears to be some sort of revenue sharing agreement.

Friday, July 01, 2011

To do 240 km/hr on the highway - that's why we need a gigabit

Some people try to calculate the need for bandwidth per household and arrive at 32 Mb/s, discounting x users and y connected devices. They claim that more makes no sense, because the human eye isn't even capable of digesting more information.


Here's a nice analogy, drawn from the recently widened and renovated A2 highway, running all the way from Amsterdam to Maastricht and beyond. After a heist of a Brink's money storage facility near Amsterdam, the robbers were able to escape to Eindhoven and subsequently disappear altogher. According to media reports, they had been doing 240 km/hr on the A2.

We may not need to speed that much all the time, but sometimes it's nice. And that's why we need gigabit networks!