Price development of electronic communications services

Consumer prices of voice and data transfer services have decreased significantly in recent years. In 2014, the average Finnish household spent EUR 53 per month on electronic communications services.

ARPU and monthly consumer prices

By combining the number of subscriptions with the earnings of telecommunications companies, the result is the average income flow provided for telecommunications companies by a single household customer per year (ARPU, Average Revenue per User). Because the use of different subscriptions deviates from each other, ARPUs should be examined by subscription type. It should be taken into account that fixed network subscriptions are often used by the entire household, whereas mobile network subscriptions are personal, i.e. they often only have one user.

Fixed network subscriptions may be divided into broadband and voice subscriptions. In contrast, with regard to mobile network subscriptions, the situation is not so unequivocal. Even though there are mobile network subscriptions that are intended to be used merely for voice or data transfer, it is, however, possible to use the majority of the subscriptions for both services.

Due to this, it is sensible to review mobile subscriptions as a single whole when calculating ARPUs. In 2014, earnings received by telecommunications companies from the mobile network per each household subscription stood at EUR 135. ARPU was EUR 191 from fixed data transfer subscriptions and EUR 205 from fixed telephone subscriptions.

As the earnings of telecommunications companies do not include taxes, VAT must be added to ARPU in order to be able to calculate the average price paid by consumers. When VAT (24 per cent) is added to ARPU and the sum is divided by 12, the result is the average monthly price paid by consumers for communications services.

The average monthly price of a fixed broadband subscription calculated on the basis of ARPU was EUR 20 in 2014. Prices of fixed broadband subscriptions have become significantly lower for consumers in recent years. Last year, the monthly consumer price fell by EUR 2 and, compared with 2008, the monthly price has decreased by EUR 12. The number of fixed telephone subscriptions has decreased significantly in recent years. At the same time, the monthly consumer price has increased slightly, being EUR 21 last year.

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Figure: Average monthly price paid by consumers per subscription type in 2008–2014

Last year, the monthly price paid by consumers for mobile subscriptions was EUR 14, showing a slight increase of a few cents from the year before. The monthly price of mobile subscriptions has decreased annually since 2008, with the previous year being the first one in six years when the monthly consumer price went up.

In recent years, the use of mobile subscriptions has become much more diverse as more mobile data services are being used alongside traditional voice and messaging services. Even though the use of mobile phones has been revolutionised, the change has not resulted in significant changes in the total price paid by consumers for the use of their mobile devices. The monthly price paid by consumers for mobile subscriptions has decreased by EUR 3.5 since 2008.

On average, households spent EUR 53 a month on telephone and broadband services in 2014, being at the same level as in the year before. Compared with 2008, the amount has decreased by EUR 6.

Earnings received by telecommunications companies from households

On the basis of information about earnings and investments of telecom companies collected by FICORA, changes in the ways mobile phones are used are also reflected in the division of earnings received by telecom companies from households between services. Earnings from mobile networks made up 75 per cent of total earnings in 2014, while fixed networks accounted for 25 per cent. The share of mobile networks has been in a slight increase in recent years. A more drastic change has occurred in the service-specific accumulation of earnings from mobile networks as the share of mobile data has taken over nearly half of all mobile earnings in a few years. At the same time, the share of voice services from all mobile earnings received from households has decreased each year. In the fixed network, broadband services account for the majority of earnings.

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Figure: Earnings received by telecommunications companies from households per service in 2008–2014

This article is a part of FICORA's Communications Sector Review 3/2015.

Key words: Internet, Telephone, Broadband, Land-line phone, Mobile phone, Prices, Articles, Reviews, Statistics

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