Insights - The Opportunity Behind Data as a Core Business.

The Opportunity Behind Data as a Core Business.

by Dr. Thomas Papanikolaou on March 19, 2014

At this year’s Mobile World Congress Tele2’s CEO Mats Granryd (at the time of writing this article) announced his company’s move to all-data, bucket mobile plans for its consumers. Under this model Tele2 will give away all of the voice minutes and text messages consumers use and charge only for data. Tele2 has already started implementing the new plans in some of the countries it operates “gearing the company up to be solely dependent on data”. In other words, establishing data as a core business for Tele2.

The strategic and business case considerations behind this move can seem dazzling. For a long time, and still today, many mobile operators have regarded the introduction of all-data mobile plans as the acknowledgment of being a bit-pipe. The latter comes with the associated fear of extinction of the high-profitability revenue sources: voice minutes and texts.


To illustrate the theoretical impact on profitability an all-data model can have on a mobile operator’s business, we will use the Pay-As-You-Go (PAYG) mobile plan from Three UK as a reference. Three UK charges PAYG customers 3p/min, 2p/text, 1p/MB, where p stands for pence, currency is Pound Sterling and £1 = 100p. Transforming that pricing structure simplistically to an all-data model means the user pays only for data (at 1p / MB) with voice minutes and text messages being deducted from the available data volume like Internet browsing traffic.

Let us look at the theoretical impact, noting that 1MB equals to 1024*1024 = 1,048,576 bytes:

  1. Voice: good quality voice calls (e.g. using Adaptive Multi-Rate (AMR) as an audio Codec) consume 12.2 kilobits / second = 1525 bytes / second. At that rate, 1p / MB would suffice for 11.5 minutes of calling, which would otherwise cost 34.5p.
  2. Messaging: 1MB is equivalent to 6,553 texts (at 160 characters or bytes per text). This means that for 1p one could send 6,553 texts, which would otherwise cost £131! No wonder Over-The-Top (OTT) messaging apps have seen such growth with cost-conscious consumers.

It is worth highlighting that operators implementing bucket plans often increase the price of bucket data to recover the loss of voice minutes and messaging texts. Therefore the actual impact might not be as dramatic as shown in the short-term.


Over the long-term, all-data mobile plans invalidate the existing messaging pricing models and put enormous pressure on the existing voice pricing models. So where is the opportunity in this context? What insights could be possibly driving a mobile operator’s decision (e.g. Tele2) towards all-data mobile plans and data as a core business?

  1. User behaviour is changing

    Tele2 hints at consumers moving away from PAYG plans towards bucket plans. In such plans, a bucket allowance is provided which can be used across many devices, reflecting the new usage pattern that has emerged because users either own multiple devices and/or share data with family members. The pattern has been successfully validated in the US since 2012 by AT&T and Verizon.
  2. Internet and mobile video usage increases faster than many anticipated

    Consumer communications and brand engagements are more and more taking place over the Internet. The traffic generated by Facebook, YouTube, Instagram, WhatsApp, Viber, WeChat, ... and other existing or yet-to-be-invented OTT applications increases continuously, and often in an exponential manner. Such increased data usage is monetisable traffic in an all-data model. Granryd hints “the trick is to realise how much data consumers use and to move them up the bucket chain”.
  3. The cost of implementing all-data plans is reasonably predictable

    With consumer communications are more and more taking place over the Internet and new traffic generated being “data” rather than legacy voice and messaging, it is reasonable to assume that existing, already amortised investments in voice and messaging infrastructure do not need to be expanded to cover increased person-to-person usage. Therefore, the legacy cost side when moving to all-data mobile plans is reasonably predictable.
  4. A data-centric approach to mobile plans can enable a better user experience

    All-data mobile plans have the potential for simplicity, if implemented consistently. For example, one counter is enough to show a user how much data allowance remains, and one simple click is enough to buy more data when needed. Bucket data plans are also ideal for small enterprises, offering cost predictability and simplicity.


Even with those insights moving towards a “data as a core business” future represents a major transformation for any operator. We believe that such a future is full of opportunities, and luckily a number of inspiring examples exist that show where these opportunities can be found:

  1. E-Commerce Sponsored Access

    Amazon Kindle provides (beside heavily subsidised hardware) also free mobile access to its content (in the UK via a Data MVNO agreement with Vodafone). With more and more vertically integrated ecosystems, this could be the first of many examples to come.
  2. Brand / Advertising Sponsored Data

    Netzclub is an advertising-financed mobile phone tariff run by Telefonica Germany. In addition, the Spain-based operator is trialling a “sponsored calls” service in Brazil, which allows Vivo pre-pay customers to make a free phone call after listening to a short audio advert. We can reasonably expect to continue to grow, with Big Data and Analytics providing the intelligence for more targeted offers.
  3. Hardware Bundled Data

    Datawind (UbiSlate) (via Vodafone) and HP DataPass (via Fogg Mobile) are MVNOs with bundled offerings of free mobile broadband together with their hardware offering. Car manufacturers like Audi and Volkswagen embed high-speed mobile access in their new models to offer on-board infotainment. In the Internet of Things (IoT) / Machine-To-Machine (M2M) context we expect to see innumerable use cases that drive data growth.
  4. OTT Driven Data Traffic

    WhatsApp became recently an MVNO on E-Plus in Germany. With a global user base of 450m subscribers (30m of those in Germany) WhatsApp is bigger than E-Plus, thus creating monetisable data traffic for E-Plus. At the time of this article, MTV Mobile in Switzerland offers WhatsApp in its tariffs, zero-rates all WhatsApp traffic within the country but charges data traffic while roaming. More critically though, partnering with OTTs represents a unique and strategic growth opportunity for any operator to benefit from increased data usage and access to new users beyond their own subscriber base.
  5. Embedded Voice over IP and Messaging over IP

    In an all-data world and with the broad deployment of technologies like Web Real-Time Communications (WebRTC) voice and messaging rapidly become building blocks of the Web. Companies like Twilio show already how voice over IP and messaging over IP can be embedded into enterprise workflows and everyday consumer scenarios as programmable software components.


  1. All-data mobiles plans are a first step in long transformation journey, seeing operators moving towards data as a core business. This is a natural evolution driven by a fundamental change in user behaviour as the Internet becomes interwined with our lives. In the long-term, they invalidate the messaging business model as we know it and put pressure on the voice business model.
  2. Mobile operators have all reasons to be upbeat. They can directly benefit from the increased Internet data traffic and from voice and messaging becoming embedded building blocks into enterprise workflows and everyday scenarios. Indirectly, operators can also benefit from the new business models introduced by other value chain players e.g. data MVNOs, with further examples waiting to be uncovered in M2M and the Internet of Things context.


For the avoidance of doubt, Neos Chronos is not affiliated with and has no financial interest in any of the companies mentioned in this article. All names and trademarks mentioned herein are the property of their respective owners. Please observe the Neos Chronos Terms of Use.

  1. Tele2: Website
  2. AT&T: Website
  3. Telefonica: Website
  4. Verizon: The Everything Plan.
  5. Three UK: Website, Pay-As-You-Go Price Plans.
  6. Wikipedia: Adaptive Multi-Rate (AMR) audio Codec, Mobile Virtual Network Operator (MVNO), Internet of Things (IoT), Machine-To-Machine (M2M), Web Real-Time Communications (WebRTC).
  7. Data MVNOs: Amazon Kindle, Netzclub (in German), Datawind (UbiSlate).
  8. OTT: Facebook, YouTube, Instagram, WhatsApp, Viber, WeChat.
  9. Voice and Messaging as Web enablers: Twilio.


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