Wednesday, September 04, 2013

UK LTE networks

We now have three of four British mobile networks (EE, O2, and Vodafone) offering 4G/LTE networks. Just looking at the SIM only pay monthly tariffs (which are the cheapest), none of them are offering anything offering 4G data for less than £21 a month. 

Even that is a plan on EE that offers only 500Mb of data a month. To get a plan with a decent data allowance you are up for £26 a network on all three networks.

The fourth network, Three, is not launching until December - delayed probably because the bulk of their network is going to be running on 1800MHz spectrum that EE were required to divest as a condition of the T-Mobile/Orange merger, and transfer of this spectrum was delayed by the conditions of that merger. Three have said that they will not have special pricing for 4G and that customers will simply be able to use 4G data on their current tariffs. This means their cheapest 4G tariff (including 500Mb of data) will cost £6.90 a month, and their unlimited data tariffs (the cheapest of which costs £10.90 a month) will continue to operate with 4G. None of the other
operators are offering unlimited data on 4G at all

Therefore, the only network offering unlimited data will be offering it at approximately half the price of the cheapest tariff of any kind offered by anyone else.

There were always two ways to go with the introduction of 4G: you could use it to attempt to raise monthly spend from customers, or you could use it to try to increase market share. It was always likely that Three - having the lowest current market share - would go for the latter. That this would lead to such enormous price disparities as this was not expected by anyone, I suspect. I don't think Three expected that the other operators would try to make 4G quite as expensive as they have.

One possible caveat that may exist is that I have only been talking about tariffs that have been publicly advertised. There does exist a secret world of unadvertised tariffs that exists alongside the advertised ones. Some of these are offered by networks to their large business customers, and others to customers who ask to leave the network. Often this second category take the form of "Loyalty discounts" in which an advertised tariff is reduced by £x per month for the life of the contract if the customers signs for another minimum period). It may be that EE, Vodafone, and O2 are offering such discounts now, and "4G cheap" or "4G at no extra charge" is a sweetener being offered people who are talking to the customer retention departments. If not now, this will likely happen when Three have their LTE network online. Plus I am certain large corporate customers are negotiating to find the best possible deals, as they always do.

It will be interesting to see how this plays out. One possibility is that too many people go for Three's offers, and they find themselves hitting capacity constraints. If so, they may have issues, as they have what appears to be an adequate amount of spectrum, but are not as well served as Vodafone or EE. (O2 have by far the lowest amount of 4G spectrum of any of the four operators, which is why high price rather than market share might be the way to go for them). Curiously, also, 2x15Mhz of 2600MHz spectrum was bought by BT in the recent auction, and this would be very valuable to either Three or O2 if they hit capacity constraints at some point. It will be interesting to see how this comes into play, as it inevitably will at some point.

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