Category Archives: Commentary

Telenor Norway: Inside-out

TelenorTelenor should be admired for having seen the potential of mobile in developing Asia long before everybody else. Telenor’s operations in e.g. Bangladesh, Pakistan, Myanmar, Thailand and Malaysia have through quality, simplicity and cost efficiency gained significant scale: 55% of the group’s EBITDA originated from Asia in 1H 2015.

52 market shareIn its home market, Norway, Telenor is the undisputed leader with a revenue market share of 52% – in total and within mobile – in 2014.

But before we conclude on Telenor’s local superiority, we should remember that Norway (who isn’t part of the European Union) has had a low level of competition within telecom for decades. Norway’s mobile market was a duopoly until the end of 2011 – when Tele2 bought Network Norway and accelerated network rollout. So unfortunate then that Tele2 was left without any 4G frequencies in the auction conducted by the Norwegian authorities in the end of 2013. The highest bid was given by a mystery bidder and since the auction accepted sealed bids only, Tele2 wasn’t allowed to overbid and consequently thereafter made the only possible decision: To pull out of Norway. (Most of Tele2 was sold to one of the two remaining operational operators, TeliaSonera owned NetCom.) logoThe mystery bidder was later shown to be linked with the CDMA450 data-only provider which still today hasn’t launch mobile services on its own network.

Let’s be clear on that Telenor had nothing to do with this regulatory flop, but it has clearly benefited Telenor

Whereas Telenor has proven to be both innovative and quick to react internationally, the company doesn’t have to exert itself too much in Norway. As long as Telenor build a reasonably good network (with Nordic standards), customers come and stay.

13When we today add Telenor Norway to the Nonstop Retention Index (after it having won our poll), it will be on a position just below the historical industry typical with an index of 13.

This means that Telenor’s readiness to retain mobile postpaid customers in consumer segments isn’t bad, but mainly based on traditional retention tools. In a competitive context where customers aren’t locked in and have much flexibility and choice, Telenor with this index risks losing customers to competition.

There are elements in Telenor’s proposition in Norway which are differentiating – but to a higher extent than usual, Telenor’s proposition appears designed inside-out – based on what suits Telenor – rather than outside-in starting with customer preference and behaviours.

Particularly, it is the mix of policies – volume, throughput tiers, overage – used to monetise mobile data which pulls Telenor’s Nonstop Retention Index down.

Let’s go through the six categories that form the Nonstop Retention Index to explain how Telenor Norway gets an index of 13.

Inclusive value

Since Norway is one of Europe’s most expensive mobile markets, you might think there’s much included in Telenor’s mobile plans?

Telenor Norway plans 2

On the contrary; inclusive value is a weak category for Telenor. In February, Telenor reworked its plan setup (see picture above) and even though some plans got a bit more mobile data, the most expensive plans became even more expensive.

Telenor Data SIMTelenor decided that XL and XXL customers must have an inclusive data-only SIM. An included extra-SIM is good for the index – but at the same time Telenor raised those prices significantly. For customers who previously had two separate subscriptions, one mobile and one data-only, both from Telenor, this change might have been neutral, but for the majority it just meant a price increase.

In contrast to NetCom, who provides customers on all but their entry plan with 1000 call minutes to use in the Nordic countries, Telenor doesn’t include any roaming in any plan. Telenor in Denmark, facing a more competitive market, includes roaming at price points that are lower than the entry plan offered by Telenor in Norway.

Inclusive content then? Well, all Telenor subscriptions include Min Sky – Telenor’s own cloud storage for images. Since there are plenty of free third-party options for this, we have not attributed any value to this, though. If Telenor wish to improve its index, it should include premium content services.

Telenor trådloes sone

What Telenor does include, though, is public Wi-Fi. And every customer gets it. Telenor hardly mentions this differentiator, though. Is it seen as negative for the revenue generation? Or is it a reflection of that that public Wi-Fi network is limited – just 420 locations country-wide? Since inclusive Wi-Fi has a positive impact on customer retention, Telenor’s Nonstop Retention Index is affected positively by the inclusion – even if the network is small.

Telenor customers who combined fixed and mobile services aren’t given any additional value or discount – again in contrast to Telenor’s offers in Denmark. But on that note, Telenor Norway yesterday launched a service guarantee on fixed broadband:

Telenor Alltid på Nett GarantiCustomers who experience outage on their fixed broadband will be compensated with 15 GB of mobile data (valid for 5 days) if the fixed broadband problem isn’t immediately fixed. Great! But it’s only customers with a Telenor mobile subscription who get it. If you happen to have another provider’s SIM, it’s your problem. As such, this has no impact on Telenor’s Nonstop Retention Index (which is defined for mobile), but an indication of inside-out thinking: If the fixed broadband connection is down, Telenor should solve the customer’s issue. If that solution is to provide the customer with mobile data; fine, but it needs to be a solution for all, not just those who also happen to have a Telenor SIM.

No waste of data

Scores are weak for Telenor in this category as well: Unlimited plans aren’t offered and Telenor doesn’t allow any unused data to rollover to next month. This is true also for top-ups: If a customer top up the last day of a month, the unused data is voided at midnight the same day. The Nonstop Retention Index improves to 15 if Telenor changes this – just for top-ups.

Telenor Data SIMWhat saves Telenor’s index somewhat is the already mentioned fact that an additional data-SIM (sharing the same allowance) comes included with the XL and XXL plans. We need to point out that these two plans are very expensive, though: 599 and 799 NOK respectively [63 and 83 EUR]. With these prices, the throughput is still throttled – respectively to 40 and 50 Mbit/s. Want full speed? Then you need to pay 99 NOK extra per month, making the total 73 and 94 EUR respectively. Just for the service.

Currently, Telenor gives new customers on the L, XL and XXL plans full speed (up to 300 Mbit/s) in 6 months without additional charge. If the customer doesn’t cancel the option after those months, it automatically prolongs and start costing 99 NOK extra per month. Since it is a time-limited promotion, it has no impact on the Nonstop Retention Index, but this auto-prolongation (too) signals inside-out thinking.

We will come back to Telenor’s speed tiers and policy in the Buying experience & rating category.

Contract freedom & fairness

Telenor binds consumer customers who buy a handset for 12 months. This is the longest binding period agreed between the industry and the consumer protection authority in Norway, but still shorter than the industry-typical 24 months of many other markets.

Customers who take SIM-only plans aren’t bound, though. This helps the index.

Customers who have bought a handset can downgrade their service plan while still in binding – if paying an unspecified penalty. Upgrades are fine, though. If a customer wants to cancel a service while still in binding then he or she needs to pay an early termination fee. The only way to find out how high this fee is to log into Telenor’s self-serve tool (or contact customer service).

There is a lack of transparency about these fees. Existing customers could find out, but joining customers just have to wait and see. Contract freedom & fairness is consequently another relatively weak category for Telenor.

Buying experience & rating

Telenor’s buying experience is quite average for the industry: Since everything has been standardised into six plans, there’s not many choices to make. Consumers aren’t forced to make decisions on a lot of extras either: Just pick and click.

Telenor Norway plans

But the devil is in the details. Unlike most operators, Telenor pulls in all monetisation levers at the same time:

  • Data volume
  • Data throughput
  • Overage policy
  • Data-only

Let’s say you want low data volume but high throughput. The Mobil S plan above comes with 1 GB. Already this is above the Norwegian average usage (which was just above 800 MB in 2014). But then you need to settle with a maximum of 10 Mbit/s which, even though Telenor calls it 4G, is a lower speed than what 3G networks deliver.

The only way to get higher speed is to pay more. But not even if you pay three times as much (going with the XXL plan), you get more than 50 Mbit/s. (But you do get a whole lot of gigabites and an extra data-SIM which you didn’t ask for.)

Telenor has also hidden critical policy information under the “i” buttons.

Telenor Mobil M+

It’s only after a customer has clicked on the “i” button that it becomes clear that Telenor charges overage fees for out-of-bundle data in the S, M, M+ and L plans. It’s not marginal either: Every megabyte is 5 NOK up to a maximum of 399 NOK per month. That’s 42 EUR extra.

Going above your monthly allowance with just 80 Mbyte will cost as much as a complete Mobil L subscription with 6 GB and unlimited voice and SMS

Telenor will of course send customers an SMS before this happens, but still: Such overage fees are disproportionate and penalising. Telenor’s customers can subscribe to Datakontroll Norge, a free service, to gain control over their usage. But customers need to take action themselves since it’s an opt-in service. It should of course be standard.

When finding out that, in contrast, the most expensive plans don’t have an overage fee (XL and XXL customers can continue using data after the cap is reached but with speed throttled to a low level),  a cynic could suspect that Telenor designed its policy so that customers have to pay more – either voluntarily by going for the premium plans or involuntarily by paying hefty overage fees.

Telenor features the most customer unfriendly terms & conditions we have registered to date. In fairness, the policy of NetCom isn’t much better. What a differentiation it would be for either of the two operators to change it!

Customers seem to have noticed, though: In EPSI’s latest customer satisfaction report on Norway, the Telenor brand has the lowest satisfaction score of all mobile brands.

EPIS Norway Nov 2014

Put together in a Nonstop Retention Index context, Telenor has the lowest score of all mobile brands in the buying experience & rating category to date. If Telenor wants to improve its Nonstop Retention Index, this is where it would pay off best to start. The upside is very significant.

Community & following

Telenor Fri Familie

Telenor allows up to 6 mobile consumer or business subscriptions (though maximum 3 prepaid) – and one fixed subscription to take part in a FriFamilie group. The potential benefit is that these numbers can call and text each other even if there’s no balance left. Since all of Telenor’s regular postpaid plans come with unlimited voice and texts, the benefit is perhaps not obvious, but for families which still have some prepaid cards, this might be cost beneficial and provide a feeling of safety. Even though the added value is limited (again we can compare to the very substantial multi-user discounts Telenor gives in Denmark), the construction should have a positive effect on customer loyalty and the Nonstop Retention Index is thereby affected positively.

To improve further in this category, Telenor could look at referral and loyalty programs plus use Twitter more to grow a fan base.

Handset flexibility

As said, a customer who buys a handset from Telenor is bound for 12 months. This also means that if he/she wants a new handset during that binding period, he or she needs to pay a break-up fee to Telenor. This means, most likely, that few customers go for this option. 12 months is not a long waiting period, though.

If a customer is willing to be bound for 12 new months, Telenor allows customers to buy a new handset after 11 months.

Unlike NetCom, Telenor doesn’t any longer promote a handset trade-in program. There’s no early upgrade program (like what Telenor has in Sweden) nor are there any lease options.

TelenorBefore summarising, it’s important to point out that Telenor Norway doesn’t have the lowest Nonstop Retention Index. The index is 13, which actually is just below what a few years ago would have been considered industry typical (14).

While Telenor thereby obviously does some things right already, it is disappointing to see how Telenor uses policy in a way which is enforcing and non-transparent. In other industries, we see this happen with aggressive low-cost players like Ryanair, but we don’t expect this from old, solid, responsible companies. Telenor is successful in other markets without using similar inside-out tactics.

Inclusive value and simplicity make Free the Nonstop Retention runner-up

free logo smallNot a single time has Free Mobile changed its prices. Read that again. How many other telcos can say that?

In contrast, our industry is full of price changes, price campaigns, introductory prices and discounts. By now, mobile customers know that whatever the offer is this week, there’s no rush: The likelihood of finding an at least as good offer next week is high.

It’s ironic that it’s Free – a true industry disruptor – who personalises the price promise in our industry.

When Free launched its mobile offer in January 2012 it had just two price points:Free Jan 2012 launch offersAnd these price points – 2 EUR and 19,99 EUR per month – are today, almost four years later, still the same. No new price points have been added.

Customers with Freebox (Free’s triple-play) got 2 EUR discount on the first plan (making it free) and 4 EUR discount on the second (making it 15,99). Also these quad-play discounts are the same today.

But just because the price is the same, the value isn’t the same as in 2012. This is how the 2 EUR plan has evolved:

Free value expansion 2012 2015 2 EUR 2

(Unlimited Wi-Fi is also included in the 2 EUR plan today, but we’re uncertain if it was there at launch).

This is how the 19,99 EUR plan has evolved:

Free value expansion 2012 2015 19 99 EUR 2

If Free wouldn’t have expanded the inclusive value, Free’s growth of its subscriber base wouldn’t likely have continued to be as fast: The sub-brands of Free’s competitors Orange, SFR and Bouygues Telecom (Sosh, Red, B&YOU) soon copied Free’s price points. (But they have had difficulties to follow the value expansion).

The graph below shows the mobile net adds per French MNO. Every quarter since launch, Free’s growth has outpaced competition.

France net adds 4Q 2011 to Q2 2015

54Free’s consistency in pricing and its systematic expansion of inclusive value are contributing to Free’s Nonstop Retention Index. With an index of 54, Free takes the runner-up position, just behind T-Mobile USA.

Let’s go through the six categories that make up the Nonstop Retention Index to explain what else Free does right – and where further improvements are possible.

Inclusive value

Free is currently the global leader in the inclusive value category. As shown in the introduction, Free has significantly expanded the value in both plans.

Free roam like home EUIf we focus on the 19,99 EUR plan, roam like home has been added for all of EU (plus USA, Canada and Israel) – with conditions so generous that it’s actually realistic for normal users to forget country borders.

Note though that whereas the unlimited voice and messaging is valid for up to 35 days a year per country, the 3 GB of roam-like-home mobile data is a total for all those countries. But it still means that a Free user can live a month abroad each year and then use all of his/her 3 GB of 3G data abroad without paying more than the usual 19,99 EUR.

Free has also upped the mobile data allowances at home. First from 3 GB to 20 GB and this year from 20 to 50 GB. The reality isn’t as great as Free makes it sound, though:

The higher allowance is valid with a 4G device on 4G, not with a 3G-only device (that allowance is still 3 GB). A 4G device on 3G gets 20 GB.

Even though Free’s 4G network has been expanded much, the focus has been to first fulfill the regulator ARCEP’s 3G requirements: 75% population coverage on 3G three years after launch. In April this year, ARCEP confirmed that Free reached this target.

As of June 2015, Iliad (the company behind Free) reported 5266 3G sites and 3991 4G sites – an impressive rollout of 838 3G sites and 1892 4G sites so far in 2015. Still, looking at the latest time coverage measurements of OpenSignal, Free’s 4G network is having the least coverage of the French MNOs (click to enlarge):

OpenSignal Q3 2015 France

Noticeably though, it is the fastest 4G network in France where it covers (which indicates low load).

FreeWiFiFree’s Nonstop Retention Index is positively affected by the inclusive unlimited Wi-Fi – which might compensate for some of the lack in mobile network coverage. Most (all?) of this Wi-Fi is provided by customers’ Freeboxes which double as public Wi-Fi hotspots. We normally refer to this as homespots – and Free was one of the first operators globally to realise its potential and make offloading from mobile to Wi-Fi homespots automatic. Free did this to improve the customer experience, but it was also necessary from a cost point of view. Free’s mobile network was small to begin with and to be able to offer those low mobile prices, Wi-Fi became instrumental – otherwise too much data traffic would be carried on the Orange network. Free has a national roaming agreement with Orange, but the cost of using their network is motivating Free to offload as much of traffic to Wi-Fi – and to expand its own mobile network.

The bundling discount given to customers who take both mobile and triple-play from Free (touched upon above) is also positive for the Nonstop Retention Index. Also here, there’s been an expansion in value: Today up to four SIMs per Freebox get the discount. At launch, it was only one.

Free is already winning the inclusive value category in the Nonstop Retention Index. To improve even further, Free could consider including some content or e.g. consider zero-rating music services (collectively). Native Wi-Fi Calling would also, especially given Free’s Wi-Fi network and lack of cellular indoor coverage, be positive.

No waste of data

This is a weak category for Free who doesn’t have any rollover or shared data – at the same time as mobile data isn’t unlimited (even though Wi-Fi is).

But the 2 EUR plan (which includes 50 Mbyte of data) can perhaps be seen as a free data-SIM for Freebox customers (as the price then is discounted to zero). Nothing prevents having multiple SIMs.

Contract freedom & fairness

Since Free solely offers non-binding contracts and treats new and old customers the same, this category is one of Free’s strongest.

In the introduction we also showed that Free hasn’t touched its price points a single time. This contributes positively to the index.

Customers can also downgrade from the 19,99 EUR plan to the 2 EUR plan at any time, but it’s not entirely decoupled from the handset since Free’s handset installment options are reserved for the 19,99 EUR plan. So customers on handset installment plans can’t effectively downgrade. Note thought that Free’s installment plans only last for 4 months.

There are options to the handset installment plans, though. Customers could of course pay upfront, but Free is since end of 2013 also offering a handset rental option. Similar to the installment plan, it’s only provided together with the 19,99 EUR plan, but customers on the rental plan can downgrade to the 2 EUR plan – if they pay 5 EUR extra per month for the rental.

Removing these restrictions would improve Free’s Nonstop Retention Index to 57.

Buying experience & rating

It’s very simple to become a Free Mobile customer: Two plans to choose between and no extras to decide upon.

Free two offers

Adding a handset isn’t complicated either. Pick one and decide on how to pay for it – upfront, in installments or as part of a rental agreement.

Free’s webpage is simplistic – other operators’ webpages suddently feel over-designed.

In public customer satisfaction ratings, Free is ranked above industry average.

Community & following

Even without referral and loyalty programs, Free scores OK in this category partly thanks to its multi-user quad-play discount which allows up to four mobile SIMs to get up to 4 EUR discount each per triple-play Freebox account.

Free is also having a quite active and followed Twitter account (even though Facebook and other social media seem to be off Free’s radar).

Handset flexibility

We have covered most of this already, since the handset options affect how decoupled the service actually is (see Contract freedom & fairness above).

Since Free doesn’t subsidise handsets, there are, as said, three ways to get a handset from Free:

  • Buy it and pay it upfront
  • Buy it and pay it in installments
  • Rent it

Free iPhone payment options

The picture shows one example of these three options. Note that the installment option is quite a tough one: The phone has to be paid off in 4 months (total price the same as upfront).

Free has reported that handset rental now stands for 50% of Free’s equipment revenues and it’s understandable why it is successful – the payments in the iPhone 6s example above sums up to 585 EUR after 24 months – 134 EUR less than with the other two options. But the handset needs to be returned in a working condition – if not the customer has to (in this example) pay an additional 130 EUR. Keeping it is also an option, if so the customer needs to pay the difference between the “day price” of the phone and what has been paid.

If Free provided also non-rental customers with a handset trade-in option, it would lift Free’s Nonstop Retention Index yet a bit more.

free logo smallTo summarise, Free’s initiatives render the brand a very high Nonstop Retention Index of 54. The world is upside down when the same brand having Europe’s lowest prices (or thereabout) is providing its customers with higher inclusive value than anyone else. Not difficult to understand why Free’s growth continues even though not all aspects are perfect yet.

Unlimited data isn’t everything

When we today add our 14th mobile brand to the Nonstop Retention Index, it’s from a market which stands out: Finland.

Elisa Viihde 3

In a blog by tefficient, we called Finland “the land of three thousand megabytes”, but that title is now outdated – it should be “the land of five thousand megabytes” looking at the development of the average monthly consumption of mobile data per any SIM.

One explanation to Finland’s world-leading mobile data usage is that 47% of the SIMs (June 2015) have unlimited data.

elisaThe operator with the highest market share in number of SIMs in Finland is Elisa. The company is also the prime explanation to why unlimited data still prevail in the offers from Finnish operators: Elisa has quite vocally defended the model with unlimited data – when combined with speed tiers (Elisa offers up to 300, 100, 50, 21 and 0,256 Mbit/s).

One of Elisa’s competitors, Sonera, left this unlimited approach to instead promote plans with high, shareable, allowances. After some time, Sonera took one step back, though, when re-introducing unlimited plans (albeit with a 6 EUR premium). The third operator, DNA, has been holding onto the unlimited model.

Decoupled Non-binding Unsubsidised blackAnother historical peculiarity of the Finnish market is the non-binding contracts. Finnish operators typically didn’t bundle subsidised handsets with binding service contracts, meaning that Finnish mobile customers bought handsets and mobile services separately. Today, this is not so peculiar anymore since that model has proven to improve business results and rapidly is adopted as the norm also in historical subsidy markets like e.g. the US. (You could argue that it’s Finland, not T-Mobile USA, who lead the world into decoupled, non-binding and unsubsidised).


With unlimited data and non-binding contracts, Elisa must be great in Nonstop Retention? Well, with an Nonstop Retention Index of 31, Elisa is good, but not great.

Let’s go through the six categories that make up the Nonstop Retention Index to explain:

Inclusive value

Mobile services are dirt cheap in Finland – for high usage customers. But if you aren’t using much data, then the entry price is quite high compared to countries where customers can select a service plan with the exact number of minutes, messages and data he or she needs.

The decision of the Finnish operators to, more or less, solely offer unlimited data makes it rather expensive to just consume, say, 300 megabytes per month

Since Elisa doesn’t include value adds like roaming or content in its base prices, the inclusive value category becomes a weak point. On the other hand, whereas operators with limited data score some inclusive value points when they permanently expand data allowances, one could argue that Elisa’s customers do that expansion of value themselves by simply using more data without paying more:

In the first half of 2015, Elisa’s data traffic grew 98% compared to the same period in 2014

The total Finnish data traffic grew 100% – which just shows that unlimited data isn’t differentiating Elisa’s offer in the market. The Finnish number 2, Sonera, includes roaming within the Nordic and Baltic countries in all of their plans (starting at 14,90 EUR). If Elisa did the same the index would improve from 31 to 35.

Elisa ViihdeElisa has a quite developed content offer, Elisa Viihde, and even if you can have access to the platform, premium content isn’t included in the mobile plans. Inclusive content would also improve the index.

Since Elisa is providing all of mobile, fixed and TV services, one could expect that Elisa would provide customers who take mobile and fixed services with certain value adds or discounts. Only customers who combine fixed and mobile broadband gets such a discount.

No waste of data

With its unlimited offers, Elisa does well in this category, but at the same time Elisa is a bit trapped in its model when e.g. data-SIMs can’t be allowed to be paired with a smartphone SIM (even though tethering is allowed).

Elisa Viihde 2If Elisa allowed paired data-SIMs under the same (unlimited) allowance, usage would be yet higher without any additional revenue – so it’s easy to understand why. As a consequence, the Finnish phone SIM market is one distinct market while data-SIM is another. A high 20% of all SIMs in the Finnish market are data-only.

Contract freedom & fairness

Once again Elisa is good, but not the best. Elisa – alongside with its competitors – are making frequent changes of their price points and terms which isn’t exactly reassuring for customers since they don’t know if the price they pay will be lower next week.

And even if Elisa technically doesn’t bind phone customers, it sells most of its plans with a promotional discount during the first 12 or 24 months of a service contract. The logic is of course that the price should appear to be lower and that customers should think again before churning since they will then lose their discount. Those built-in price increases are at the same time negative for customer retention, though: They are effectively penalising loyal customers.

And Elisa does bind some of their customers: Phone customers aren’t, but data-only customers are.

Buying experience & rating

saunalahti_logoThe overall buying experience is no better and no worse than the industry overall. The same goes for the public rating of Elisa: The original Saunalahti mobile sub-brand used to be more popular and have higher customer satisfaction than Elisa, the company brand. Now that Elisa has re-branded everything as Elisa+something, the customer satisfaction as measured by external agencies could be expected to be around the national average.

On the terms and conditions, Elisa does one thing which is customer unfriendly:

Unless a customer gives his/her consent to be targeted for marketing messages, Elisa increases all price points by 1 EUR per month

This is communicated in a footnote which most customers likely are overlooking (the red dotted frame is inserted by us):

Elisa footnote 2

Small thing? No. This is deceptive. A customer should not have to be forced to pay extra to exercise his/her right to opt-out of marketing. Elisa’s Nonstop Retention Index takes a hit.

Community & following

It appears as if Elisa doesn’t have a referral program or a loyalty program (even though some Elisa customers can add some points to a certain retailer program).

Social media use and following is at the expected level; no more, no less.

Within its PerheReilu plan, Elisa gives discounts to user groups with two to seven SIMs which improves the Nonstop Retention Index. It could have been more flexible, though: Now all users have to be on exactly the same 5000 minutes/5000 SMSs plan with unlimited data and 50 Mbit/s of maximum speed:

Elisa PerheReilu

It would have been more elegant (and likely more attractive) would users within an account be able to individually select a plan.

Handset flexibility

As said, handsets are decoupled from Elisa’s service plans. Customers can pay for handsets either upfront or in 12, 24 or even 36 monthly installments. The total cost becomes the same, i.e. Elisa doesn’t subsidise handsets on installment plans, but they do help with the financing without charging extra for it.

Elisa phone payment options

At any point in time, an Elisa customer can pay the remaining installments and upgrade to a new handset. Noticeably, customers who have an equipment installment plan can continue to pay on it irrespective of the service plan. This means that the service plan can be upgraded, downgraded or even cancelled without any effect on the installment contract. Elisa is rewarded in the Nonstop Retention Index for this setup.

Elisa doesn’t have an early upgrade program or a handset trade-in program. Having it would improve Elisa’s index somewhat.

elisaRelying on its unlimited and non-binding heritage, Elisa scores well in the Nonstop Retention Index without doing things that are differentiating in the local Finnish competitive context. Elisa can improve its index by removing the condition that customers should pay to opt out of marketing – and e.g. by including some roaming and premium content to mobile plans.

TDC can’t bind customers for more than 6 months: Content and discounts should make them stay

Denmark might be a small market, but it’s probably the European country where mobile competition has been the fiercest – and most price-focused – for the longest time. Denmark has only had one price war, but a twenty-year long one.

Carlsberg ad in Copenhagen airport

Ad in Copenhagen airport

There are four mobile operators in Denmark – TDC, Danish operatorsTelenor, Telia and ‘3’ – but it was historically the independent MVNOs like Telmore, Onfone and CBB Mobil who drove the price-led competition. After having transformed the market, these MVNOs were, one by one, acquired by the Danish operators. But they continued as sub-brands, quite often with a separate and relatively independent management and operations. TDC, who bought most of these MVNOs, has in the last two years started to downsize the brand portfolio and bring remaining brands under tighter control.

Side note: Given the competitiveness of the market, it surprised many that TeliaSonera and Telenor couldn’t agree with the European Commission about the terms of their merger in Denmark.

Now that more and more operators globally change their mobile contracts from binding to non-binding, Denmark becomes an interesting benchmark. Local law underpins the contract duration that the local providers can enforce:

Danish legislation prevents a consumer customer to be bound for more than 6 months

Consequently, Danish operators have since long used a different toolset to keep customers loyal compared to operators who lock consumers into 24 months contracts. Thereby, Danish operators have in some cases pioneered elements of Nonstop Retention:

TDC rateWhen TDC introduced TDC Rate early 2011, it was one of the first handset installment plans in the world.

tdc playAlready in 2008, TDC launched their branded inclusive music service, TDC Play. It has since evolved from downloading to streaming and from pure music to also include films & TV series.

When we today add TDC to the Nonstop Retention Index, they enter well above the historical industry typical, but not at the top. TDC’s index is 25. This is based on TDC’s current postpaid plans for consumers, introduced as late as in June this year. As part of the introduction, TDC reduced the number of plans to just three – with 2, 8 and 30 GB.

Let’s go through TDC’s strengths and weaknesses in the six categories that make up the index:

Inclusive value

TDC does well in this category. Not only did TDC increase voice and data allowances significantly in June; they also provide free public Wi-Fi (named TDC Hotspot) to all customers.

On the content side, TDC does a lot:

  1. All customers have free access to the film & series part of TDC Play. Moreover, that access is zero-rated, i.e. doesn’t consume any of the monthly allowance. It is unusual that operators zero-rate video services since they often represent a majority of the traffic.
  2. Also the music part of TDC Play is zero-rated but the music service is not included in the 2 GB entry level plan. This takes TDC’s index down a bit.
  3. On certain dedicated mobile broadband plans, TDC includes Mobifo, an e-book service.

Telia Danmark options Sep 2015 2Even though all of this is good for TDC’s Nonstop Retention Index, it steers the customer towards a specific service. Telia, one of TDC’s competitors, are instead allowing customers to select (see picture) which services they want included (not zero-rated, though). A similar menu approach would have given TDC an index of 28.

TDC SamleFordeleThrough SamleFordele, TDC customers who bundle mobile subscriptions with either fixed broadband or TV receive 3 more hours of mobile talk time (might be unlimited already) and 3 GB more data – each with up to 5 mobile subscriptions. This is generous since multi-user mobile already comes with a discount – we are coming to that.

On roaming, TDC includes TDC Rejseklar EU only on the most expensive 30 GB plan – and even there it’s really limited with just 100 MB data per month in EU.

No waste of data

Since TDC (in an international perspective) has high allowances and zero-rates services, it’s perhaps logical that TDC doesn’t allow any unused data to be carried over to next month. Doing it for both regular data and top-ups would increase TDC’s index to 33.

TDC Faelles DataWith more than one SIM in an account, TDC allows all subscriptions in the account to share the data, though.

But it does not apply to the top-of-the-line 30 GB subscription. These subscriptions can’t even share their data with a data-only SIM – something customers on the 2 or 8 GB plans can with up to two data-SIMs. That limitation reduces the value of the 30 GB plan significantly since it’s unrealistic to month after month consume 30 GB on a single smartphone. TDC’s terms & conditions are in quite graceless language describing what will happen if 30 GB customers break the one-SIM-only rule. TDC’s index falls two points because data sharing doesn’t apply to all subscriptions.

Interestingly, TDC gave their customers (also on sub-brands) unlimited data during three months (May-July) this year to celebrate TDC’s new network. Since the unlimited data promotion is discontinued, it doesn’t have an impact on the Nonstop Retention Index, but it makes the use case limitations on the 30 GB plan difficult to understand.

Contract freedom & fairness

TDC binds all customers, but as said in the beginning, it can only be done for 6 months. When a similar 6 month legislation was introduced in Belgium in 2012, the Belgian operators decided to make contracts non-binding. This has been (and is still) an option for TDC. It would increase TDC’s index from 25 to 29.

TDC doesn’t currently allow customers to pause their subscription or downgrade it – perhaps considered unnecessary given the shorter-than-usual binding period.

Buying experience & rating

TDC has a simple buying experience with few options, few extras (since most of them are included) and an easy-to-navigate web. As indicated, there are many and they are not always transparent. But they are no worse than on average in the telco industry.

Community & following

This is a weak point for TDC. A low community engagement is combined with a lack of recommendation, referral or loyalty programmes. Therefore TDC’s index in this category is solely dependent on their multi-user discount. Which, given the included content and added value if customers bundle with fixed, is very generous:

TDC multi-user discount 2 GBOn the 2 GB plan (right), the second to fifth SIM gets a 34% discount compared to the first.

But with the 8 and 30 GB plans, the price for additional SIMs is still the same 99 DKK, in other words a substantial discount of 50% on the 8 GB plan and 69% on the 30 GB plan. Such discount is almost unheard of and signals that TDC really wants Danish households to become total TDC customers.

Handset flexibility

With a legal possibility to lock customers in for just 6 months, TDC doesn’t do anything extra around handsets beyond providing the TDC Rate installment option: No early upgrade plan, no handset trade-in, no lease plan.

If a customer wants a new handset, he/she can start a new TDC Rate installment plan and pay off the two plans in parallel. But it stops there; TDC doesn’t allow people to have more than two plans.

TDC_logoDuring 2013, 2014 and in the beginning of 2015, TDC’s mobile consumer customer base in Denmark shrunk: TDC lost market share to Telenor, Telia and ‘3’. Even though TDC was early with installment plans, inclusive content and multi-user discounts, competitors have since quite some time copied these initiatives. The redesign of TDC’s offering in June – making it simpler and more data-oriented – was therefore necessary. TDC’s Nonstop Retention Index shows that the brand is now on the right track but with things left to do.

Other mobile operator brands should look at Danish brands as an inspiration of how to mitigate the impact of short lock-in.

New MagentaMobil: Yet Telekom scores lowest Nonstop Retention Index so far

Telekom, Germany’s incumbent operator, updated its MagentaMobil postpaid offers two weeks ago.


But the changes, including an increase in data volumeshigher throughput (Telekom has tiers) and an increased validity of top-up data weren’t enough for a high Nonstop Retention Index: Telekom is the first brand to join the list with a negative index, -3.

The contrast to the top-ranked family member T-Mobile USA is obvious.

Still, the changes mark an improvement for Telekom in Nonstop Retention and the below three-times-written sentence in a recent announcement promising “more speed, more data and more fairness” indicates that Telekom indeed has an aspiration to keep customers loyal with more subtle means than lock-in:

“Deutsche Telekom is offering all these extras at the same price”

So let’s look at the six categories building up the Nonstop Retention Index and see what Telekom could do to improve further:

Inclusive value

This category has the highest weight in the Nonstop Retention Index. And Telekom have pulled out some of the right tools from the toolbox: Inclusive Wi-Fi and inclusive roaming. It would have been perfect for the index, had these benefits not been offered exclusively with only one plan: the premium MagentaMobil L Plus. It costs 79,95 EUR for SIM-only (after 12 months of 71,95) – a price level which is unparalleled in EU outside of Germany. If you add a handset to it, the price reaches 99,95 EUR per month. If Telekom would have included Wi-Fi and roaming on all plans, not just the most expensive one, their index would have been +3, not -3.

Spotify TelekomWhat Telekom does provide to all MagentaMobil customers is free Spotify. It’s two times free to begin with: It comes without the monthly, regular, Spotify fee of 9,95 EUR. But it is also zero-rated. This means that any MagentaMobil customer can stream the music he/she wants regardless of data allowance. Great for the index – had it not been for the three month limitation. After those test months, customers have to pay the 9,95 EUR. The zero-rating continues, though.

telekom-magenta-eins-vorteile-11-09-14-940x400The ultimate goal of Telekom is to get customers to go for their quad-play product line MagentaEINS. And if customers do, they get full 4G throughput (which they might have already), unlimited calls (which they might have already) and – of course; this is quad-play – a discount. Regardless, it’s positive for Telekom’s Nonstop Retention Index.

No waste of data

German customers haven’t yet discovered mobile data – the average usage per SIM was a low 287 Mbytes per month in 2014.

MBoU 2014 with Germany highlightedGiven this, it’s perhaps not surprising that Telekom isn’t making a lot within this category: No unlimited plans, no rollover, no multi-user data sharing and data sharing with a secondary SIM only on the most expensive plan (same as above).

As part of its changes to the MagentaMobil plans, Telekom increased the validity of top-up data to 31 days – previously also the top-up data died by the end of each month – but if Telekom wants a higher Nonstop Retention Index, it needs to make top-ups valid forever. That single change would improve the index from -3 to 0.

Contract freedom & fairness

Lock2This is Telekom’s weak spot. All contracts – even SIM-only – are binding for 24 months. Customers are not given any flexibility when it comes to e.g. pausing or downgrading the service. Telekom doesn’t give customers the freedom to stay. And consequently their rating in the Nonstop Retention Index takes a beating.

Buying experience & rating

Similar to other markets, the operator brands aren’t the most preferred in Germany. Instead it’s the MVNOs and sub-brands who have high customer satisfaction. In DISQ’s survey from February 2015, Telekom has the 11th position (of 15 brands) – although it is ahead of E-plus, O2 and Vodafone (who comes last in the survey). The higher consumer rating together with its test-winning network, gives Telekom “a healthy average” score in consumer rating.

Telekom’s buying experience is also around average. The terms & conditions are long and complicated, navigating through them requires many clicks – and who can read a 6 pt font?

Telekom fine print

Community & following

Telekom recommendation programTelekom has an advanced recommendation programme in which customers can select their bonuses in case friends follow their recommendations. There’s also a savings possibility for multi-user accounts as there’s a 10 EUR discount on the second user’s SIM. Both of these contribute positively to Telekom’s index.

Social media is not used much by the German operators and Telekom could improve its index by mobilising customers on Facebook and do much more on Twitter.

Handset flexibility

For the customer loyalty, it’s positive that Telekom has a handset trade-in program which allows customers to trade in their old handset and receive a voucher valid for Telekom’s products or services.

Some operators – especially American – are successfully keeping customers by promising a future handset upgrade. With Telekom, there is an option to replace the handset every year, but it comes with two caveats: First, it costs 10 EUR extra per month. Secondly, the customers have to accept a prolongation of the binding contract with another 24 months. This combination of both payment and contract prolongation isn’t common and can be perceived as a trap by the customer when he/she comes to collect the upgrade he/she paid for.

telekomThis is yet an example of Telekom having access to the right tools, but refraining from using them unless customers pay a premium. To increase their rating in the Nonstop Retention Index, improving customer fairness and transparency of plans should be considered. Following T-Mobile USA’s lead, introducing non-binding alternatives would surely benefit also Telekom.

T-Mobile USA takes top spot in Nonstop Retention

When we today launch Nonstop Retention® – our toolbox for how mobile brands should keep customers with non-binding contracts loyal – we also introduce the Nonstop Retention Index.

t-mobileIn our first top list – more brands will be listed in the coming months – T-Mobile USA takes the No 1 spot with a Nonstop Retention Index of 58.

Even though T-Mobile didn’t originally invent all of their “uncarrier” initiatives, it’s logical that T-Mobile becomes highly ranked as the company systematically worked with continuous customer retention in mind, launching initiative after initiative to make customers actively want to stay with T-Mobile.

Some categories where T-Mobile ranks particularly well are:

Inclusive value

During the last year, T-Mobile has several times added more value to their Simple Choice plan without increasing the prices. The fact that most of these changes – last one being the inclusion of roam like home in Mexico and Canada – are done not only for new customers but also for existing customers is very positive for T-Mobile’s Nonstop Retention Index.

T-Mobile music streaming2Other positive contributors are Music Freedom allowing customers to use 33 music streaming services without data charges and T-Mobile’s introduction of Wi-Fi Calling, which improves indoor coverage and thereby reduces risk of churn.

Bundling with fixed broadband or TV (so called quad-play) would have increased T-Mobile’s index – if it would add to the inclusive value or bring additional discount.

No waste of data

As one of few operators, T-Mobile is still providing unlimited data (albeit with restrictions on tethering) as a premium option for customers.

Data StashFor customers on limited plans, T-Mobile’s introduction of Data Stash, carrying over unused data to next month, is also improving the Nonstop Retention Index. The more data customers accumulate in their Stash, the lower the churn risk. Who wants to leave gigabytes of unused data behind? T-Mobile could have done more, though. Data Stash isn’t available for customers on the 1 GB entry level. If it was, the Nonstop Retention Index would have been 60. Data sharing (which all of T-Mobile’s competitors have) would also have improved the index.

Community & following

With a CEO who has 1,6 million followers on Twitter, you shouldn’t perhaps be surprised that T-Mobile is good within the “community & following” category (even though the number of followers John Legere has isn’t an indicator in the Nonstop Retention Index).

T-Mobile family planBut in addition to T-Mobile’s strong use of social media, T-Mobile has also been very successful with its family plan which – in a simple-to-understand way – gives friends and family members additional discounts when they attach yet a user to an account. T-Mobile has said that more than 50% of their subscribers are on family plans. Noticeably this was achieved without data sharing.

T-Mobile also has a referral program which is positive for the Nonstop Retention Index. One way for T-Mobile to improve further would be to introduce a loyalty program.

Handset flexibility

JUMP!T-Mobile was for long synonymous with the equipment installment plan (EIP). It allows customers to change handset when they like – if they pay their remaining balance. But T-Mobile was also a pioneer when introducing the early upgrade plan JUMP! in the US. With over 11 million enrolled customers, it’s been a success for T-Mobile – especially considering that it costs an additional 10 USD per month.

Both of these initiatives are positive for the Nonstop Retention Index. So is the fact that T-Mobile followed Sprint to introduce also a handset lease option – dubbed JUMP! On Demand.

But T-Mobile can still improve. Their Nonstop Retention Index of 58 is still far from the maximum of 100. Here are the two categories where T-Mobile is relatively weak:

Contract freedom & fairness

Surprised? The marketing messages from T-Mobile suggests that there are no strings attached. But there is one. If a customer cancels the service contract, he or she if forced to pay the remaining equipment installments upfront. This is, de facto, coupling the service to the handset since most people can’t afford paying upfront – that’s why they took an installment plan in the first place. If T-Mobile instead allowed people to continue paying on their installment plan (even if they paused their service contract), there would have been a chance that the customer could have rejoined a few month later. Now that’s much more unlikely.

Buying experience & rating

When it comes to buying experience, T-Mobile isn’t standing out from the crowd: In a traditional American fashion, there’s much fine print and much of terms & conditions:

T-Mobile fine printIt’s not easy for customers to make educated buying decisions. And for customer loyalty it doesn’t matter if the operator can prove its legal right, it matters that the customers understood what they bought.

Even with these improvement areas, T-Mobile tops our first version of the Nonstop Retention Index.

In the coming months, we will add more mobile brands to the index.

Read more about the Nonstop Retention Index: