The price war and the drift towards the low-cost have long been marking the teleco market in our country. That, added to the growing investments that the main operators are making, they say, has pushed them to adopt different measures to, on the one hand, reduce their expenses, and on the other, increase their income.
In the case of Telefónica, two decisions in recent days perfectly illustrate both paths: the voluntary termination plan (less expense) and the increase in prices of the Fusion packages (more income). But beware, what this rise does not bring any improvement and does not affect all customers, but to those who have contracted an “old” rate. The solution that many consider? Go to one of the new ones, who, in addition, carry a mobile phone as a gift … Of course, in exchange for a stay.
The permanence associated with a gift
Let’s get into context. At the beginning of the year, the arrival of fiber at 1,000 Mbps brought with it the already traditional annual increase of Movistar with new prices for your convergent packages. Not happy with it, in April, the operator completely renewed the Fusion portfolio with two important changes: all rates included a free smartphone and increased their fee by around 3 euros per month.
Those free or subsidized telephones were a customer acquisition strategy that Movistar decided to abandon in 2012 and which it therefore recovered again last April. But that initiative did not come alone, rather the return of free phones it hid an invitation to stay, something that Movistar had also eliminated from its rates long ago.
Indeed, since April, the new Fusion rates have encouraged users to accept a mobile for zero euros, but, in order to receive it, they force them to sign a contract to “lease a mobile terminal for a period of 36 months”; If you unsubscribe earlier, you have to pay a “fine”. If you reject the phone, there is no penalty due to early cancellation, so we cannot say that they have an associated permanence, but there is no doubt that they push the client to accept it.
It cannot be said that the new Fusion rates have an associated permanence, but there is no doubt that they push the client to accept it
In any case, and despite the “trap” of permanence, the two price increases that Movistar has carried out this year have followed the strategy of “more for more”: as a customer, you pay more, but you get more in return (higher speed fiber in January and a free mobile in April). The hike that he plans to make in February, however, does not offer any further improvement.
More revenue per customer and more tied customers
Although Movistar launched its new portfolio of Fusion packages for new registrations, it also made it available -optional- to its customers at the time. They could choose between staying with their current rate without seeing their conditions (or the price) modified or switch to the new plans to enjoy a gift terminal by paying a higher fee and assuming their corresponding permanence.
Since then, Movistar maintains two families of Parallel Fusion fares: those in force since April 2021 (with “free” smartphones) and the previous rates that are still kept by customers who have not voluntarily migrated to the others. The price increase foreseen for the new year will affect, as of February 7, the latter, that is, all those with any of the old Fusion rates.
On this occasion, the “price adjustment” (as Movistar calls it) does not bring any associated improvement for them, but, with this rise, the old Fusion rates are more expensive by 3 euros per month and they cost the same as the new ones without including the “free” smartphone. And who says smartphone, says television, console or tablet, because there are several devices available to choose from.
We will have to see how Telefónica’s play turns out in terms of portability because the company has been chaining bad figures in this regard for a long time
In April, the decision was to pay less each month or take a phone, but now is when many users are really considering migrate to the new rates, even at the cost of signing a 36-month stay. Because of course, who does not want a mobile or a TV “as a gift” paying the same?
We have, therefore, a double benefit for the operator: it gets all its customers to pay those 3 euros more on average per month (108 euros per year, which is said soon) and, in addition, that many more users “stick” to Movistar for 36 months. And above, it unifies the prices of your catalog. It remains to be seen how Telefónica’s play turns out in terms of portability because the company has been chaining bad figures in this regard for a long time and it does not seem that this is going to help reverse them.