Both the UK and France are gaining new LTE options in the coming weeks, as Vodafone and Telefonica O2 join EE in the former’s 4G race, while Bouygues goes up against SFR in the latter.
August 29 marks the launch of the two UK cellcos’ LTE services, ending a 10-month period of exclusivity for the largest mobile operator, EE, which gained a headstart when it was allowed to refarm its 1.8GHz 2G spectrum for 4G, before its rivals had the chance to acquire their own new frequencies at auction earlier this year (Vodafone and O2 have their GSM networks in the less favorable 900MHz band rather than 1.8GHz).
In preparation for 4G competition, EE has been adjusting its tariffs, initially criticized for charging high fees for relatively small allowances, and boasting of its coverage advantage. It has now passed the milestone of providing LTE to over 100 towns and cities (actually 105), having added 10 more locations during August. Its network now reaches 60% of the population.
With EE in pole position on coverage and speed (since it doubled its download rate to 150Mbps), and O2 stressing its rapid roll-out plans and the advanced behaviors enabled by LTE, Vodafone is differentiating itself primarily with content and services as well as tariffs. It has partnerships with Sky Sports and with music provider Spotify. Even though its spectrum position, particularly its 800MHz holdings and its balance of low and high frequencies, is superior to O2’s, it has perhaps learned its lesson from the 3G launch, where it over-emphasized its strong network but failed to engage consumers with the benefits that could deliver.
The highest includes 8Gbytes a month of data plus unlimited calls and texts. The cheapest contract is a two-year deal at £34 a month for 2Gbytes plus unlimited calls and texts, while there is a SIM-only deal for £26 a month. To get a subsidized device, the user must commit to at least £36 a month in tariffs. O2 is expected to announce similar pricing.
Apart from saying it will not charge a price premium for LTE, and will continue to major on its unlimited mobile broadband offerings, fourth cellco 3UK has not yet announced firm plans for 4G though it is expected to go live this year. As well as new frequencies bought at auction, it will be able to deploy the 1.8GHz spectrum it acquired from EE, which was compelled to divest about 25% of its holdings as a condition of its merger (it was formed from the combination of T-Mobile UK and Orange UK).
Analysys Mason analysts Chris Nicoll and Ronan de Renesse predict that the UK will be the third largest LTE market in Europe by the end of 2014 (after Germany and France) with about 8m 4G connections.
In France, third cellco Bouygues Telecom will switch on LTE services on October 1, and aims to distance itself from the recent price war initiated by the entry of low cost provider Free Mobile. Instead, it hopes to use 4G speeds and content services to differentiate itself in a more profitable way, ‘repositioning its products and services in order to differentiate the company from its competitors and revitalise growth’, as it expressed it in a statement to accompany its interim financial results. These indicated the effect of the increased 3G competition and the disruptive impact of Free ‘ sales in its mobile unit were down 15% year-on-year to €2.29bn in the first half of 2013 while EBITDA fell 16% to €469m.
Bouygues has been pipped to the post in LTE by France’s larger mobile carriers, Orange and SFR. The former initially offered only business services, but now targets consumers too and covers more than 150 towns and cities with LTE. SFR was the first carrier to launch commercial LTE for consumers, at the end of 2012, and this month switched on its services for areas of capital Paris (it will cover the whole city by year end). It says it will cover the 300 municipalities in the ‘le-de-France region around Paris by the end of 2013 and is targeting 55 towns and cities by then, which would bring LTE to about half the French population (70% including DC-HSPA+). Orange says LTE or HSPA+ are available to 67% of the population now.
SFR and Orange are using the 800MHz and 2.6GHz spectrum they acquired at auction for LTE, while Bouygues is initially relying on refarmed 1.8GHz GSM frequencices, and aims to cover 100 towns and villages during October.
Despite the talk of innovation, it will also engage its rivals using good old-fashioned price tactics, undercutting their 4G data plans. It will offer LTE under two new ‘Forfait Sensation’ plans, one offering up to 3Gbytes of data at €34.99 a month under a 24-month deal with a handset included; the other providing 8Gbytes at €49.99. Both plans include 50Gbytes of cloud storage, 19 TV channels and unlimited calls and texts. SFR offers LTE services under its ‘Carr” label, starting at €39.99 for 2Gbytes of data a month with contract; while Orange provides ‘4G/HSPA+’ speeds under its Origami plans, with 2Gbytes of data costing €46.99 a month with contract and subsidized device.