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IFA Berlin, 2006: O2 Germany Unveils Bundled Services, with DSL| September 5, 2006 | Wireless Services - Europe | Show Update | Client Access Analyst: Emma Mohr-McClune
On August 31st O2 Germany unveiled a mobile and broadband services portfolio at the IFA Berlin trade show. The three packages will be commercially available at the end of October, and will feature three packages of mobile, DSL landline telephony and Internet access via DSL, with consolidated support and billing. O2 Germany’s DSL portfolio comes in three sizes, ‘S,’ ‘M’ and ‘L’ (see below), and features a WLAN-enabled O2 DSL Surf and Phone Router (EUR 19.99, plus EUR 49 one-off connection cost), which can be connected to ISDN terminals and two analogue phones/fax machine. New mobile subscribers will also receive a EUR 5 monthly rebate on their DSL charges for the duration of the contract. Analytical Summary • Current Perspective: Positive on O2 Germany’s new bundled service portfolio, as this will allow the provider competitive leverage in a rapidly changing market. O2 Germany was one of three service providers to unveil a DSL-oriented bundled service strategy at IFA this year (along with Vodafone Germany and T-Com) – powerful evidence that the German telecommunications market is now starting to converge. O2 Germany will benefit as a front-runner in this services evolution. • Vendor Importance: High to O2 Germany, as the introduction of DSL services to its consumer mobile customer base is an important first step in the vendor’s evolution from a single-service operator to a ‘Total Communications Provider,’ with a powerful proposition for consolidated billing, support, cross- and up-sell incentives. • Market Impact: High on the German mobile market, as O2 Germany’s new multi-service strategy will change the traditional parameters of competitive attack and response in the mobile market. Up until now, mobile operators have tended to compete with each other on price alone. However, this new ‘bundled service’ trend will create new, less easily addressable competitive challenges in the form of consolidated billing and support, multi-service incentives and data management value-add. Competitive Concerns • O2 Germany is now forced to share the bundled service limelight with two key competitors – Vodafone Germany and T-Com. Furthermore, Vodafone Germany’s DSL service will be commercially available two weeks earlier than O2 Germany’s announced October 27 launch date. • O2 Germany’s decision to offer DSL services in three sizes (S, M and L) is confusing. Consumers are asked to pay EUR 10 extra a month for the ‘M’ offer, but the only real difference between ‘S’ and ‘M’ is in the pricing for DSL telephony (‘minute-based’ pricing with the ‘S’ offer, as opposed to flat-rate pricing with the ‘M’ offer). Vodafone Germany’s DSL pricing is simpler, and more transparent. • O2 Germany’s bundled service portfolio puts strong emphasis on DSL Telephony, and this will make O2 Germany more vulnerable from a competitive attack from new quarters – namely, from T-Com, T-Online and numerous pure-play DSL providers. • O2 Germany’s DSL Surf and Phone service has a high start-up cost. • O2 Germany has failed to create a distinctive offer for the family. Vodafone Germany has beaten it to this initiative with ‘Zuhause Family’ (EUR 54.95 per month, including an extra SIM card). Wireless Services - Europe
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