Compressing costs and bandwidth

Savings as big as Europe Smartphone use in Europe has reached a tipping point, with over half of mobile phone users in the top five European markets now having a smartphone in their hands. This has been a boon to carrier revenues as the mobile phone companies can typically charge more for smartphone data plans, and smartphone users tend to consume more data. By last October, the number of smartphone users jumped by 13 percentage points to reach 54.6 per cent of all mobile phone users, in five major EU markets (France, Germany, Italy, Spain and the United Kingdom). This Comscore data understates the popularity of mobile devices, with the recording period ending before the latest holiday season. Europeans are well on their way to their goal of universal broadband access by end 2013 and they like it mobile. According to the European Commission, 97.5 per cent of all households in the EU had access to at least one fixed broadband network by mid-2012 and 94 per cent had wireless coverage. Just under half of the population, 47.8 per cent, had an active mobile SIM card and most of this group, 38 per cent of the population, had these cards in their smartphones.

Compressing costs and bandwidth

Counting the costs Within the European Union, geography matters when it comes to smartphone popularity and data consumption. Sweden has over 100 per cent penetration and the lowest use levels are in Hungary and Belgium at 19 per cent and 28 per cent respectively. Not only do Scandinavians have smartphones, they really use them. The average Fin used over 2GB/month during the second half of 2012. In nearby Sweden, the average smartphone user was more restrained at just over 1GB/month. Europe has a substantial advantage over the United States when it comes to the cost of bandwidth. According to Wireless Intelligence, G/LTE data costs $2.50 per GB on average in Europe, around half the global average of $4.86. In Sweden, users can pay as little as $0.63 per GB per month, a fraction of the $7.50 per GB charged by Verizon Wireless in the United States. However, the range of prices between individual European countries is substantial. Europeans can pay between 8 and 78 a month to use a smartphone with a minimal 2GB data allowance and 200 minutes of phone calls. Access to cheaper rates is closely tied to market structure not careful shopping. According to Finish telecom consultancy Rewheel.fi, customers will pay an average of 140 per cent more for their smartphone use if there isnt an independent mobile network operator present or where one of their E5 Group is.

A question of volume and speed Mobile phone operators are under pressure. While total revenue is growing, the average monthly revenue per connection is declining in most countries according to Ofcom . And as they invest in new networks, they are also faced with declining revenue from traditional moneymakers such as ringtones, wallpapers, and paid apps. In response, they are doing more than setting data limits; they are also factoring broadband speeds into their pricing structures, with customers paying more per GB as the connection speed increases.

Compress data, not your lifestyle Going over the data limit has a cost in both time and money for consumers. Once the limit is crossed, operators will sometimes throttle the bandwidth to power users or charge them a supplementary amount for their extra consumption. But, there are ways to reduce bandwidth consumption without crimping smartphone use. One simple way is to use Hotspot Shield VPN. The data compression function in Hotspot Shield VPN reduces bandwidth consumption by up to 50 per cent. This feature is an integral part of the VPN and is automatically activated whenever using Hotspot Shield. Users can even set the level of compression, trading off some image quality for greater savings.

Compressing costs and bandwidth

Marginal savings add up In just its first year 2012, Hotspot Shield saved its users 60 million MB of bandwidth all without limiting their smartphone use. Given the range of European bandwidth costs, it potentially saved users the equivalent of $40 million to $150 million in additional bandwidth charges see figure one. And the company is poised to more than quadruple those savings in 2013.
Figure 1: Total savings [MB] during 2012

Source: AnchorFree Data Analysis Compressing costs and bandwidth

However, actual savings to customers could have been much greater because of the marginal cost of crossing over the data limit. After exceeding the data plan limits, the additional GBs of broadband used are often charged at a much higher rate than for the data under the limit.

I. Europes Information Society How much do you pay when you use your mobile phone abroad? II. Rewheel research 2012 III. The E5 Group consists of Vodafone, Deutsche Telekom, France Telecom, Telefonica and Telecom Italia IV. Ofcom CMR analysis V. Report: Mobile challengers needed to drive down data prices in EU VI. Analysis: European LTE operators look to new pricing strategies to boost mobile broadband revenues

Compressing costs and bandwidth