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Does Internet Replace Mobile Telephony?

Does Internet Replace Mobile Telephony?

Comments of InfoMarket Agency

The two largest mobile operators, one after another announced the increase of tariffs for mobile communications. Orange Moldova from March 1st will charge their customers 1.5 lei per minute of conversation if the subscription limit exceeded; Moldcell introduces the same increase from 17th of March. Only one of the three mobile operators in Moldova is not in hurry to raise the rates - Unite.

The mobile telephony market in Moldova rebuilding again. The rapid development of technology makes tough competition between the mobile service providers and shifts the emphasis on consumers, as well as on mobile telephony operators.

Even 15-18 years ago in Moldova (as the company – Orange (former Voxtel) is on the market since 1998), the main and perhaps the only service provided was mobile telephony at the price of $1 per minute. The advent of competition was the opening of Moldcell in 2000 - the market learned such service as SMS and the price per minute dropped to 5-6 seconds. Moreover, Unite brand which is the national communication operator of Moldtelecom joined the market in 2007. 

Operators are introducing new technologies in the race for market revenue. Moreover, Moldova has become a kind of testing ground of new technologies that international companies have implemented later on other markets. The beginning of mobile Internet era: the first licenses to operate in the 3G standard were issued in Moldova in 2008. Since 2012, operators obtained new licenses and began to develop a network of 3G +, 4G, 4G + ... 

Huge investments in development of mobile Internet networks are made, operators are pushing strollers through for new users of mobile Internet. The mobile Internet service is close to the price for broadband and digital TV subscriptions. Besides, it can hardly be expected something new in the mobile telephony: the market is saturated and there is a struggle at the level of clients dragging from one operator to another. 

According to 9 months reports in 2015 (more recent figures unavailable), 4.332 million subscribers used mobile communication in Moldova, two years ago – 4.298.000, the difference is only 34 thousands of subscribers. The maximum numbers of registered subscribers were achieved in the 1st quarter of 2014 which was 4.492.000. 

Mobile voice traffic increased by 5 %, amounting to 4.7 billion minutes over the last two years (9 months in 2015 to 9 months in 2014) and the amount of income of the three operators has increased by 2 % - up to 2.7 billion lei. The volume of sales of Orange Moldova company decreased by 0.8 % (amounting to 1.8 billion lei) and other operators increased their sales: Moldcell - by 8.4 % (741.1 million lei), Unite - by 7.7 % (101.4 million lei). 

Perhaps those figures made the company Orange Moldova to announce the increase of tariffs from March 1, 2016, particularly, the price of an excess of subscription package minutes raised from 1 lei to 1.5 lei per minute; i.e. 50%. 

The company notes that in fact it is not necessary to attach great importance to this event, as all the prices for subscriptions are remained the same, only the price of those minutes that subscribers would talk over their subscription increased. In addition, we must keep in mind that the company constantly invests in the development and modernization of their mobile network. The equipment is imported, and the devaluation of the leu in the 2014-2015 biennium strongly pushed its payback period. 

Almost immediately there was a message from another mobile operator - Moldcell, which is also raised the price per minute for calls exceeding the subscriptions from 1 lei to 1.5 lei, though not from March 1st as Orange does but on March 17th, 2016.  

As InfoMarket agency was informed by Moldcell representatives, in particular "financial instability, growth rates, and the overall business climate of the country do affect our company. In an effort to mitigate the impact of financial market volatility on our customers, we decided to adjust those tariffs, which will not impact them directly and will keep the monthly fee unchanged, as well as maintain the number of provided included minutes."

According to specialists about 25-30 % of subscribers are exceeding their subscription limits.

News quickly overgrown these comments on the Internet, many are asking whether it is a conspiracy? But conspiracy in our country is the "Head" - a Council for the Protection of Competition, which may consider any question if the Council requests so. By the way, InfoMarket agency has asked the third operator – Unite, whether they are planning the prices for services/minutes to be increased? The press service of the company assured us: Unite is not going to raise prices for their services remaining the minimum cost per minute in the amount of 1 leu within the country. On this occasion, it was promised to issue a press release.  

Information about the price increase for minutes in excess for subscribers of two mobile operators lay in the Internet environment in the fertile soil. The fact that shortly before the price increase information, one of the largest providers of Internet access services - StarNet company, also announced a price increase by an average of 8%.  The main negative comments addresses to mobile services operators those who announced the raise of prices later. By the way, some users can immediately offer an alternative way for mobile voice communication by using Skype, Viber or other similar Apps. 

The current level of development of Internet services in Moldova can play a major role in the mobile communication market. Despite the fact that there is free internet access in the capital's trolleys, bus stops and parks, completely abandon the mobile telephony could only the mobile Internet. This branch of communication market only intensifies competition among operators. 

According to the first 9 months’ report of 2015, 295.4 thousands of subscribers receive mobile Internet connection. The dynamics of the last three years shows a constant increase of subscribers, which grew by 33.1 % within two years (up to 221.9 thousand in 3rd quarter of 2013). If the mobile telephony market is unlikely to have the growth - 3.5 million inhabitants of Moldova and 4.3 million subscribers, the mobile Internet market still has its potential. That is the main reason all the operators creating subscriptions and promotions in the mobile Internet services market. 

Mobile telephony monopolist is Orange Moldova company with 68.55 % of the market shares but let’s take into consideration the mobile internet segment, all three operators look worthy: Orange – 34.12%; Moldcell – 40.87%, Unite – 25.01% (this according to data for the first 9 months of 2015). At the same time two years ago, the situation was different: Orange – 46.98%; Moldcell – 25.33%, Unite – 27.69%. This figures indicate that the market has not formed completely and the operators should struggle for their customers in the segment of the market. 

On the one hand an increase in prices for mobile telephony concerns only those minutes that subscribers didn’t factor in their subscription plan. That is really affecting about 25-30 % of subscribers. On the other - this step of the two mobile operators (Unite, as mentioned above is not going to raise the price of their services) can be seen as micro- provocation in order to attract more attention to the companies in general, and mobile internet services, in particular. After all, if subscriber cannot afford to talk much on the phone, the alternative - using more applications, such as Skype, Viber and many other programs with an access to Internet or mobile Internet. So, in any case, the operators will gain their income and there is a possibility that over time the revenues from the sales of mobile Internet will exceed revenues from mobile telephony. The market is constantly changing nowadays.  

P.S.: During the first 9 months of 2015 the volume of mobile telephony market was 2.7 billion lei, the growth - 5 % but mobile Internet market - 0.43 billion lei, increase - 19.5 %.

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