Guy Laurence, Ronan Dunne and David Dyson were no doubt rubbing their hands with glee when EE revealed its long-awaited net addition figures for its first quarter as a 4G network. For these figures to drop on the previous quarter and 2011, despite an exciting next generation service and a massive ad campaign lead by Footloose star Kevin Bacon, looks like a misstep.
Critics will probably point to EE’s 4G pricing plans. For always-on consumers - let’s call them technofreaks - who want to stream video on a train platform, 500MB of data per month is too little and looked like an attempt to offer a contract under £40. The high-end pricing was eyewatering - £61 per month for 20GB of data. And that’s a special offer.
So, are we looking at a botched launch? Not necessarily. EE CEO Olaf Swantee deserves credit for his deft manoeuvring that allowed him to launch a 4G service early. While it sent rivals apoplectic, it did ultimately lead to the timetable for rolling out next generation mobile being sped up. The speed of the service’s implementation is similarly impressive, covering 43% of the population in a matter of months.
While EE could be criticised for its pricing strategy, it would surely be crucified if it was to show its hand too early. Though Ofcom deemed otherwise, the operator has had an effective monopoly on 4G services until its rivals launch in the late spring. Why price too low when you have no-one to compete against?
Critics may point out that 4G adoption is highest in the countries where there is no price premium – step forward the US, South Korea and Japan – but those regions have several companies slugging it out for customers. Currently, the UK has one. No wonder prices are higher compared to 3G.
The real battle for 4G will begin in just a few months as Three flexes the muscles of its Ultrafast network, and O2 and Vodafone come into play. It will be then that we will see what EE really thinks of 4G and what it can offer. With its flotation later this year, EE needs to shrink costs, increase its base and make sure they are the right kind of customer, and show investors that there is serious growth potential in the business. 4G is one aspect of this. While the initial results are disappointing, the months ahead will be fascinating.