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Europe Market Perspective Vol. 7, Issue 5Product Type: Market Research ReportPublished by: Pyramid Research Published: April 2007 Product Code: R8-558 Description AGCOM, in cooperation with the Italian government, has passed the Bersani package, a broad liberalization drive in several sectors of the Italian economy, including the telecom market. The per-transaction mobile top-up fee and expiration period for mobile top-up credits have been banned. All price plans now have to be published and made available in a standardized format in order to facilitate comparison. Also, early termination fees for mobile contracts must not include charges which are not associated with operator’s costs (e.g., handset costs). The direct short-term impact will be compounded by structural changes brought about by the regulator’s increased emphasis on price transparency. Mobile operators must change their business models to adapt to an environment of increased price-based competition in mobile services.Table of Contents Telecoms regulator AGCOM has passed a number of measures (the Bersani package) aimed at ending practices which in Italian public opinion have been deemed abusive. Operators are no longer allowed to charge a per-transaction top-up fee for prepaid mobile services, are no longer permitted to cancel unused top-up credits after a certain time from transaction date, and they have been forced to publish all their price plans in a standardized sheet to facilitate comparison. Other revenue-depressing interventions are currently being considered.We estimate that the measures already implemented will shave 4.2% off of projected service revenues of mobile operators in 2007. The direct loss of sales from these practices will be attenuated by hikes in other service charges, initiatives to increase voice usage, and (for some operators) market share gains. The continued push towards price transparency will have a longer-lasting effect in competitive dynamics and pricing power, and will intensify the impact of imminent MVNO entry. Mobile operators must change their business models, attracting subscribers to low-cost sales channels, increasing subscriber loyalty, differentiating in value-added services (VAS), and changing their cost structure to an environment of price-based competition in voice services. |
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