Mobile device users in Hong Kong have been enjoying some of the cheapest service fees in the world as four network players and a slew of mobile virtual network operators (MVNOs) compete fiercely in a relatively small market. The price war has now escalated to a new level, with a firm declaring that it will offer 5GB of mobile data, albeit at slower speed, for less than HK$100 per month.
On Monday, HKBN, the city’s second largest fixed-line operator and an MVNO, announced a price reduction in its 4G mobile data monthly plan in a bid to lure users from other networks.
In the entry-level service plan, new users or people who switch from other networks can enjoy 5GB data usage at 21Mbps speed for HK$96 per month with a 24-month contract. That represents a 17 percent reduction from the previous price of HK$116 for such package, marking a new chapter in the battle for customers among the city’s mobile operators.
Also, selected HKBN customers and mobile users from HKT would enjoy cheaper monthly service fees for 6GB and 12GB data usage at faster transmission speed.
HKBN’s move came after Birdie Mobile, a SmarTone sub-brand targeting the mass market, recently unveiled a contract-free service plan at HK$90 for 5GB data usage each month with a waiver of the HK$18 monthly admin fee.
The service plan, which was a real bargain deal for entry-level users, seems to have prompted HKBN to step up its own game.
Birdie Mobile, which uses the SmarTone network, bills itself as the first pure online mobile service provider in Hong Kong. The company has no retail outlets or service hotlines to handle customer services, relying instead only on the online channel for completion of transactions. That helps it save on costs, leaving it with money to spend a huge sum on TV advertising to build up brand awareness.
It is quite clear that Birdie is being viewed by HKBN as a major competitive threat, going by the latter’s latest data plan that aims to counter Birdie’s contract-free offer with lower price.
The price-cut suggests that HKBN’s mobile business may have failed to meet the company’s expectations, although the operator has claimed that it has lured over 200,000 customers, and that many of the users were those who had switched out of HKT mobile service.
If HKBN did lure significant numbers away from HKT, the latter should have seen a fall in its mobile subscribers last year. But according to HKT’s financial results for 2017, the company had about 3.22 million post-paid mobile customers at the end of December, an increase of 3 percent from a year earlier. Meanwhile, Hutchison Telecom, another big player in the market, also recorded a mild increase in its mobile subscribers during the year.
As all network operators appeared to be doing well in terms of retaining their customers, a question mark hangs over HKBN’s claims as to how it secured its subscribers.
Unlike network operators which have their own infrastructure to provide services to users, MVNOs like HKBN lease capacity from others in order to be in the market. Given this, the service pricing should factor in the network leasing cost if an MVNO has to make a profit.
With the cut-throat pricing, it is likely that operators like HKBN are foregoing profit in the race to wean mobile users from rivals.
According to some market watchers, HK$78 per month could be a bottom line for HKBN to provide entry-level data usage plan. But based on its track record in launching an offer targeting HKT’s mobile subscribers last year, the results were perhaps not too good, given that HKT achieved net gain in subscribers across the board.
To ensure success in the long run, mobile operators should look beyond pricing in their competition strategies and focus more on service innovation and enhancing customer service quality.
HKBN is a latecomer in the mobile market, so one can understand its decision to focus on the price factor in the initial stage to boost its user base. But such approach can only be taken up to a point.
Some operators have already begun to realize this and are seeking to differentiate their service on as aspects other than pricing.
That includes even the new player Birdie Mobile. Saying that it understands customer needs, Birdie is touting a plan that allows frequent travelers to enjoy mobile data roaming service at prices starting at HK$12 per day.
Hutchison Telecom’s 3HK, meanwhile, is expanding its mobile gaming product offerings by teaming up with several gaming platforms to provide customized service plans for users to play games on their smartphones with faster transmission speed.
HKT, on its part, has launched Club SIM to provide users with more value-added services at cheaper price.
Given such initiatives by key market players, HKBN needs to ponder if its price-reduction strategy will be enough and whether it will really yield the desired results.
The company may discover that its prospects, over the longer term, will be better if focuses on value-added services and innovative products, rather than just undercutting rivals on price.
– Contact us at [email protected]