In an era beyond voice and text, 4G technology will transform the relationship between mobile networks and their customers.
LTE will hit O2, Vodafone and Three this summer, seeing customer service standards bolstered further and marketing ramped up significantly. New tariffs could see the networks offering 4G data plans across multiple devices in the continuing battle to raise cash by pushing additional services.
Two 4G price models are already emerging. The only operator to currently offer 4G, EE, is charging a premium for the service, while its smaller rival Three plans to include LTE as part of an improved network at launch in the second half of the year.
A price war is unlikely. O2 and Vodafone are cagey about how they will charge for the service ahead of launch, but it’s thought they will follow the same pricing model as EE. In contrast, Three’s price plans will see it offer 4G on demand (see box), following the operator’s strategy to offer ‘unlimited’ on all of its data plans since 2010.
O2 and Vodafone have been watching EE closely and it’s likely they will push out their networks rapidly. ‘O2 and Vodafone will get 4G out really quickly; I think we will see the fastest network roll out we’ve ever seen,’ says CCS Insight CEO Shaun Collins. ‘Then - and EE have started it - there will be a battle around speeds.’
As all efforts then turn to marketing, the operators will first push 4G to high end customers. In a bid to entice consumers onto more expensive contracts, networks will launch experience groups, with every store geared up to show 4G’s worth. Roadshows will demonstrate the technology, and cash will be injected into training.
EE’s store staff have already ‘undergone extensive training’ on 4G, the operator’s retail director Deirdre Burns tells Mobile. ‘From a retail perspective, it’s very simple and exciting to illustrate superfast to customers with just a straightforward in-store demonstration comparing download and uploads speeds to 3G,’ she says, adding that the technology ‘tends to sell itself after that’.
But experts agree that later, the 4G battle will be around tariffs, with shared data plans launched around multiple devices in the home. ‘I think you will see disparity in prices for an equal offer, but you will see options and add-ons,’ says Gabriel Brown, senior analyst at Heavy Reading. ‘The most obvious of these will be the multi-device plan; no UK operator offers this yet.’
Brown says a move to offer multiple device tariffs would see the UK emulate the US, where the LTE market is more mature. In the US, Verizon Wireless has 30% of post paid subscribers on its Share Everything plan and AT&T is on 14% with its Mobile Share offer. The plans are tiered on a number of devices and data consumption. ‘That’s the biggest way you can add on £5 or £10 per month and monetise your customer base. There’s money on the table for this,’ Brown says.
As with the launch of 3G, things will move fast. ‘I think within two years every product you buy at high end prepay and above will be LTE - even by the end of this year,’ Collins says.
And as new tariffs start to launch, operator and customer relationships are poised to transform even further. ‘LTE is the catalyst that gives operators the opportunity to rethink their relationship with end users,’ Collins says. ‘With 4G the real revolution is in the tariffs.’
EE says it will stay in pole position with 4G
EE has signed up 318,000 4G customers since the service went live last year, showing there is a healthy consumer demand for the service. Yet many consumers are still struggling to understand why 4G is better. ‘The problem is globally, and in the UK especially, you have to tell people what 4G is about,’ says Collins. ‘With premium prices, EE couldn’t describe how it was worth more.’
But EE’s retail director, Deirdre Burns, is confident, saying the operator ‘will always maintain its lead’ and is firmly on track to reaching one million 4G customers by the end of the year. The company expects to see demand increase as other operators launch and ‘understanding and excitement around 4G increases’.
Three's 4G pricing 'difficult to sustain'
Given the amount it spent on spectrum, Three’s 4G price model will be ‘difficult to sustain’, according to CCS Insight’s Shaun Collins. ‘I am intrigued by Three’s stance on not charging a premium for 4G; they paid millions for spectrum. I expect they won’t be as aggressive with roll out,’ he says.
Collins thinks that it will not be possible to offer next generation services on unlimited plans in the long term. ‘I think the dilemma it had around remaining unlimited for 4G had to be a commercial decision,’ he says.
But Brown disagrees, saying: ‘What Three is doing is logical for Three and EE’s strategy is right for EE.’
Three argues that 4G is ‘just another step in the process’ that will increase capacity. A spokesman tells Mobile: ‘For us, LTE and new spectrum will give us more capacity to give customers a better experience. Today our ultrafast network uses DC-HSDPA, a high-end 3G technology. It already covers most of the population, delivering peak speeds in excess of 25Mbp/s.’