Moscow providers' revenues fall after market saturation

Incomes of metropolitan Internet access providers began to fall following the decline in the cost of services. The reason for this was the saturation of the Moscow market and the successive attempts of players to lure users to their more favorable rates, according to Vedomosti.

Since 2016, tariffs for Internet access in the capital have decreased, on average, by 7.1% - from 430 to 390 rubles. The high-speed tariffs were the most expensive: 50-100 Mbit / s connection fell by 7.9% to average 575 rubles, and over 100 Mbit / s - by 14.2% to 969 rubles.

Serious competition to classic wired providers is made by mobile operators due to the ubiquitous deployment of LTE networks. Thus, in 2016, the subscriber base of conventional providers decreased by 1%, while, as mobile operators constantly report an increase in the load on cellular networks and an increase in the number of subscribers of Internet plans.
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Giants, Rostelecom and MGTS, remain on the plus side in the market. These providers are not the outflows, but the growth of the subscriber base. This is due to the fact that Rostelecom and MGTS can provide subscribers with a greater speed of access to the Network than competitors.

In the fight against customer churn, a “packet” approach is becoming increasingly popular with providers when not only network access services are provided, but also, for example, IP-TV. The “set-up” of several, at first glance, unrelated household aspects complicates the rejection of provider services in favor of a better offer. This works particularly well in the case of providing such services by mobile operators - in addition to the Internet and TV at home, one subscriber’s mobile connection is also tied to one account.

Another provider tool is the “discount” period for new subscribers. If five or ten years ago, when connecting, a grace period of 1-3 months was offered, now it has been increased, on average, to one year. At the same time, the provider can quite legally prescribe “compensation”, which will compensate his losses in case of early termination of the contract (usually is for a period of 2-3 years). On the other hand, each subscriber “signed” in this way is a predictable stable profit, which is beneficial for the business.

Sooner or later the capital situation will spread in the regions. The only thing that can stop the natural market process of reducing prices due to increased competition is the political regulation of the sector and the imposition on providers of new functions that entail additional costs.