Vodafone’s zero-rated and bundled content packages have addressed increased data usage, without the need to transition to unlimited data plans. The company introduced content bundles in Spain, Romania, Italy, Hungary and Greece during the second quarter of 2017. The content bundles exempt data usage for social, music, and video sites, such as Facebook, Instagram, Twitter and WhatsApp.
Vodafone currently offers three separate packages: Music (€3), Social & Chat (€5), and Video + Vodafone TV passes (€10).
Operators favor bundled services over discounts and trial offers
Content bundles have proven largely popular and successful at luring and retaining subscribers and driving users onto higher value data plans. Although not generally huge drivers of revenue for mobile operators, content bundles are strategic ways for operators to engage users and differentiate their services. But unlike Vodafone’s content passes, most previous deals have focused on providing “free” access to premium services, rather than addressing the mobile data cost. 37% of the more than 100+ partnerships tracked by IHS Markit are bundled offers. These bundled partnerships include agreements with third-party providers such as Spotify, Netflix, and Facebook.
Vodafone’s introduction of Vodafone Pass follows similar moves by Three UK, which launched its “Go Binge” program in July 2017, through which subscribers can use Netflix, SoundCloud, Deezer, and TVPlayer without having it count toward their data plan. Virgin Mobile also launched a similar program in which it zero-rates Facebook apps. However, unlike Three UK and Virgin Mobile, Vodafone charges for its Vodafone Passes.
Vodafone’s strategic pricing model targets ARPU growth
Vodafone’s move to monetize content data bundles aims to generate direct revenues, while also addressing growing user demand for data. The move also encourages low-spending users to increase their spending. Vodafone reported increases in ARPU in all of the countries it launched Vodafone Pass in during the second quarter of 2017. Markets such as Italy and Greece recorded noticeable hikes in ARPU from the same quarter a year ago. Vodafone furthermore reported an increase in subscribers in three of the five European markets served by Vodafone Pass.
Vodafone holds off on unlimited data plans for now
Unlike the US, where the top four mobile operators have relaunched pricier unlimited data plans, Vodafone has shied away from offering unlimited data, opting instead to focus on zero-rated and content bundle offers. The move away from unlimited data plans helps avoid network congestion, which can degrade the customer experience. Vodafone’s has done well to encourage data usage growth, which has resulted in an increase of average data usage from 1.3GB in Q4 2016 to 1.6GB (average monthly iPhone and Android smartphone data usage including India and Netherlands) in Q1 2017. Video, social and audio applications now account for 60% of all data used across Vodafone’s European four markets.