T-Mobile's family discount offers new challenge to KPN, VodafoneZiggo

Wednesday 24 January 2018 | 14:33 CET | Market Commentary

T-Mobile Netherlands has introduced a new discount offer, called 'Alles Onder 1 Dak' (Everything Under 1 Roof). This is in line with the market trend to focus on the household/family. The discounts offered are substantial and can help the company compete with the multi-play advantages offered by KPN and VodafoneZiggo.

'Alles Onder 1 Dak' has two components to start:

  • Unlimited Voordeel. Members of the same household taking T-Mobile's unlimited mobile data plan Unlimited Go receive a discount on the standard monthly price of EUR 35. The discount ranges from EUR 6.50 per month per person for two subscribers in the same home to EUR 10 for three subscribers and EUR 12.50 for four, five or six subscribers at the same address. This takes the price down to as little as EUR 22.50 per month.
  • Mobiel Voordeel. For mobile customers on a different type of data plan, each family member receives a discount of EUR 2.50 per month.

The 'Unlimited Voordeel' follows a similar strategy employed by KPN and VodafoneZiggo to focus on the hosuehold. The underlying idea is undoubtedly to reduce churn, but also to win market share. The idea is not totally new at T-Mobile, as it already offers the 'Mobiel + Thuis Voordeel', for customers taking both mobile and fixed services from the operator.

Unlimited Voordeel steps up competition

The discounts offered by T-Mobile will help the company compete with what KPN and VodafoneZiggo are offering with their multiplays combining fixed and mobile. A family of four can save EUR 50 per month at T-Mobile. KPN and VodafoneZiggo offer customers who bundle fixed and mobile services a discount of EUR 5 per month per Sim (up to 10 per household) plus other bonuses. 

The 'KPN Compleet' fixed-mobile offer gives customers double the usual mobile data, the ability to share mobile data, free calls among family members and an extra channel package (value: EUR 15 per month). Discounts are also offered on various components in the first months of the contract. 

The offer is similar at VodafoneZiggo: EUR 5 per month off mobile plans, double mobile data, a free channel package worth EUR 15, and a free internet security package (value: EUR 7 per month). Vodafone also charges a one-time fee of EUR 25 for each mobile contract. 

As is common in telecom, the 'total cost of ownership' is difficult to calculate. This depends on which perspective you take: 

  • From the T-Mobile perspective, its Unlimited Go plan already incorporates a number of the benefits provided by the other operators, such as double data, data sharing and free group calls. The value at KPN and VodafoneZiggo thus depends on the number of people in the household and the channel package chosen. A discount of EUR 50 per month can be achieved with four people under the T-Mobile offer, while it takes seven people to reach this amount at KPN and VodafoneZiggo (assuming the free channel pack is worth EUR 15 per month).
  • For KPN and VodafoneZiggo, there is also a value attached to their offers of respectively double data, data sharing and free group calls and double data and online security. This means that a discount of roughly EUR 50 for a family of four can also be achieved. 

If we add T-Mobile's offer for fixed-mobile customers, the operator does better in the comparison. This adds a discount on the fixed portion of the package of EUR 2.50 per month and the customer also gets to choose a free sports package worth EUR 7.50 per month: either Fox Sport Totaal for the discounted price of EUR 5 per month or Fox Sports Eredivisie free. T-Mobile has also followed its Amercian sister company with offers such as six months free Netflix.

T-Mobile profiting from increased scale

The question is whether KPN and Vodafone will start feeling enough pressure to introduce their own unlimited plans. Can they continue with the idea that T-Mobile and Tele2 are mainly competing on the 'low end' of the market, where the KPN and Vodafone brands are unaffected? That's doubtful.

If KPN and Vodafone do introduce their own unlimited mobile plans, they will need to compete either on price or with more 'extras' for customers. Whatever the case, the market is headed in this direction, as the ACM recently underlined. T-Mobile and Tele2 originally expected their unlimited offer to provide a boost to ARPU, but this hasn't turned out quite as expected. That's bad news for the market leaders, which have little room for growth. For T-Mobile and Tele2 it's less important, as they will benefit from economies of scale as they grow their market share.

The government will be watching the situation closely - an important factor as T-Mobile seeks regulatory approval for its merger with Tele2

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