Operator wars: the network battle

Operator wars: the network battle

Operators are drawing battle lines as 4G’s reach expands, with each of the big four seeking to differentiate using their networks.

In contrast to the 10-year long roll out of 3G, LTE deployment has so far been fast and efficient. Now, each of the operators is using 4G in the fight to secure - and maintain - customers: EE is pushing the quality of its network, with Vodafone and O2 selling content as a differentiator. Meanwhile, three is offering 4G to customers at no extra cost.

As a result, competition is fierce, but the mobile market is getting crowded. In a space cluttered with manufacturers, operating systems and applications, it’s becoming increasingly hard for network operators to stand out.

According to research analyst Jon Collins at Gigaom: ‘It is still, from a consumer perspective, really just about having access to the pipe. Operators are providers of network connectivity pipes: they are the plumbers of the industry.’

How do you sell a network?

Professor Simon Saunders (pictured), director of technology at Real Wireless, who, alongside regulator Ofcom, helped design the UK 2013 spectrum auction, believes that their supporting role makes it integral that the operators deliver great capacity and user experience.

However, consumers do not understand a sales pitch based around the network. this puts pressure on the operators to push the benefits of 4G without talking about the technology.

In the US, coverage is the key differentiator for all operators. However, in the UK, networks are offering a more diverse set of propositions around content and coverage.

‘EE is differentiating itself through the depth, quality and speed of the network,’ says Shaun Collins, CEO, CCS Insight.

Vodafone’s content push

In contrast, Vodafone is asking customers to buy content alongside 4G. ‘What they are buying is Sky Sports and Spotify,’ says CCS’ Shaun Collins, adding that the marketing around this ‘has been most effective’.

But Gigaom’s Jon Collins disagrees, saying: ‘The irony is, the mobile operators have a poor track record at giving services in the way that people want. Offering Sky Sports and Spotify: what is that about? What business user is going to want that?’

Instead, he says, they should offer services such as all-you-can-eat video uploads. ‘There are opportunities to differentiate but they are aiming at the wrong target, missing the target or promoting the wrong thing. The bottom line for me is, mobile providers need to think harder and smarter about the services that they put on top of 4G.’

O2’s confused 4G message

Out of all of the operators, O2’s 4G message is the most difficult to discern, experts agree. Like Vodafone, O2 is offering content with its 4G contracts, but on a lesser scale: customers who sign up receive exclusive access to a range of music, sport and gaming content.

CCS’ Shaun Collins says: ‘O2 refresh has been great and we will see them develop that as a powerful tool to bring people onto 4G. But O2’s marketing shout on 4G needs tweaking and upgrading on quality of content; they need to think hard.’

Shared data and early upgrades are boosting ARPU

Another trend from the US that could hit the UK is the emphasis on companies such as OpenSignal or RootMetrics: apps that sit on phones and work out performance. ‘These are a new way of measuring performance,’ says Gabriel Brown, analyst at Heavy Reading. ‘AT&T in the US has done very well in RootMetrics and they are using this in their advertising.’

Shared plans, where data is shared among a family or business, are also increasingly offered by operators, in a bid to entice customers to upgrade to 4G. ‘The operators think this will unlock the potential of 4G,’ says CCS’ Shaun Collins. ‘With the shared tariffs, they want users to have 5Gb of data instead of 3Gb - which helps their ARPU. They want users to think of connectivity beyond their smartphones.’

Operators say these types of plans are already doing well. ‘Our sharer plans have been successful: families see the obvious benefits such as the ease of a single bill,’ EE director of network strategy Dave Salam tells Mobile, adding: ‘There is also a small business appeal. that is very compelling.’

Has mobile become a commodity?

And so mobile operators will continue to push services and the quality of their networks as they struggle to make their mark. Are they finally viewed as a commodity? No, but they are a utility, Saunders says. ‘If they have built an infrastructure that people are going to need to put their data over for the foreseeable feature, it’s not a commodity - but it is a utility.’


HEAD TO HEAD: The operators have their say

O2:‘Our 4G has better indoor coverage than 3G – the 4G network uses the same frequency as the old analogue terrestrial TV that was switched off last year, so it passes through walls more easily than other frequencies. Our 4G network now reaches over 18 million people in the UK.’

Vodafone: ‘We believe that 4G isn’t just about speed, but about what customers do with it. Our 4G plans come with entertainment built in - and we’ve seen great pick-up for these. as an indication, we signed up over 100,000 customers to 4G plans in just over a month after launch.’

Three: ‘Some networks have chosen to focus their marketing on higher speeds, but speed is less important than the capacity 4G offers us to enable more customers to enjoy a better overall experience.

‘Our big focus is on control: giving customers control over their spending. This underpins our 321 pay as you go offer, Feel at Home roaming and 4G at no extra cost. We are going to do more in this area.’

EE: ‘Getting 2 million people on board with 4G speaks for the demand that’s there. We are selling the experience rather than the applications. I think it’s starting to get better as a service; it’s a learning experience; people do recognise the difference and are willing to pay for the extra services to get the higher speeds.’


It is interesting to see operator marketing departments still attempting to differentiate themselves by network coverage/quality, when in effect there ...
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