Since telco merger EE – borne from T-Mobile and Orange – grabbed a headstart on 4G networks in the UK it has now reached the milestone of one million customers. But considering its position, it could have done even better.
EE launched its first 4G service in October 2012, followed by an aggressive rollout across the country. Now, the company’s network covers over 100 towns and cities, which EE claims are faster than similar networks in Europe, the USA, and Japan.
CEO Olaf Swantee said in a statement that EE’s entry into the 4G market was a booster shot for the British mobile sector.
“We set a new standard for UK mobile networks,” Swantee said. “We have seen one of the fastest adoption rates in the world”.
EE is no longer the only 4G provider in the UK as spectrum was opened up to Vodafone and O2, with Three to come this December.
Although EE claims its price point is competitive in the UK and abroad, many customers will still be priced out of the service – at least, to make the super fast network worth the extra spend.
For example, using EE’s online shop, a data plan with the Samsung Galaxy S4 costs £51 per month for 20GB of usage. More affordable plans include £26 per month for 500MB of data, £31 per month for 1GB of data, and £36 per month for 1.5GB of data. Even though customers can take advantage of the ultra fast network, just a couple of gigabytes of data will not be enough to justify the extra expense for many. Streaming may be super speedy, but the limit will run dry, quickly.
Despite this, EE commissioned research noted half of users are using fewer or no public wi-fi spots since upgrading to 4G, while a third stream more content over 4G than they did on 3G, including with TV and film services such as iPlayer and Netflix.
EE’s milestone, of course, must be put into context. Its massive head start kept it ahead of the pack because it was the only company offering actual LTE networks on LTE devices that customers wanted.
Ovum’s Steve Hartley, head of Industry, Communications & Broadband Practice, explained, speaking with TechEye:
“There was no competition,” Hartley said. “We’ve got a wealthy market, and we’ve got a market that is a very high user of mobile broadband, but at the same time 3G networks haven’t actually evolved quite as quickly as other markets around the world. The difference between a 4G and 3G experience is quite extreme, you’re going to notice, it’s a lot smoother and faster”.
With that “pent up demand,” Hartley said, if you are the only company able to serve it, naturally there is an advantage.
EE managed to efficiently and quickly put the necessary infrastructure in place to nail coverage. “They have deployed the network very quickly,” Hartley said, “certainly if you compare to other LTE launches around the world,” but the others have only just launched so EE will “continue that quasi-monopoly for a while yet”.
Crucially, EE was able to have the right handsets available at launch.
“One of the nuances in the EE statement, about being among the fastest uptake, you have to remember LTE have only really been available in something approaching volume this year and the end of last year,” Hartley said.
“Earlier LTE launches relied heavily on dongles and MiFi type devices, and of course that has a natural pull of potential customers, whereas with the other handsets, if you have mobile broadband on your handset, you’re a target for LTE”.
“Having that range of devices available at launch has really helped them. If you can imagine trying to launch without the iPhone 5, the Samsung Galaxy S3, then the 4, the Blackberry Z10, you had these hero devices coming out at roughly the same time, and just so happened if you want them to work on LTE you could only go to one place”.
Considering EE’s near year long monopoly, the milestone could have been even better for the company, Hartley said.
“Given they had a monopoly they could have done even more,” he said. “You have all that coverage and devices people want – then you price things aggressively to encourage people onto LTE networks. Others launching could have found themselves two million behind or more. Since they launched, the premium has been too much. I’ve spoken about it to EE, and to Olaf, and we have a fundamental disagreement for the business case for LTE.
“For me it’s about transporting data efficiently. For Olaf, and understandably under pressure from shareholders, he thinks you charge a premium for LTE. As you can see, the two business models don’t marry too neatly”.
If a company with a monopoly charges a top premium, it actually slows down the adoption rate, and businesses want that adoption rate as high as possible, as quickly as possible.
“The one million mark being hit early is a nice landmark. But I did wish they had done even more, because they could have really shaken up the competition,” Hartley said.