EE names its price

After months, nay years, of waiting, what is arguably the most important date for UK LTE is here. EE, the network that will launch the UK’s first national LTE service a week today, has announced its prices, giving UK consumer a first look at what they will have to pay to use the service. And as they say, the proof is in the pricing.

The prices cover subsidised smartphone plans, SIM-only plans, mobile broadband USB,  mobile wifi devices, and fixed-line broadband using both standard ADSL and fibre-to-the-cabinet, but what will interest the man/woman on the street though are the phone plans – and the starting tariff is £36 a month for a phone with unlimited calls, unlimited texts—and 500MB of data. A 1GB allowance is £41, 5GB takes it up to £36. The top-tier is an 8GB allowance at £56.

Move to SIM-only and 500MB will cost you ‘only’ £21. Its £25 for 1GB, £31 for 3GB and £36 for 5GB. There’s no 8GB SIM-only option for some reason.

This could be a problem.

Assuming a download speed of 15Mbps (we actually saw 27Mbps in the speed test at launch), and that entry-level 500MB of data could be downloaded in less than five minutes. Which, assuming 43,800 minutes in a month, would leave you with 43,795 minutes remaining with which you can’t not use the internet on your 4G phone.  You could pace yourself of course – but that would equate to around 10 seconds of full-tilt LTE a day. Whoopee.

Of course, that’s an exaggeration of real world use – you don’t tend to use that much data in one go on your phone, but even snacking on data, 500MB is a little on the lean side, to say the least.

What these expensively priced data buckets don’t seem to take into account is the way that LTE should change the way people uses their phones. Fast access will make using cloud and streaming services second nature – but if they do, they will run into their data allowances almost immediately.

Olaf Swantee, the chief executive of EE told Rory Cellan-Jones, Technology Correspondent for the BBC that, “”We really think we’ve priced it at the sweet spot,” and, “it’s all based on months of consumer research.”

From the look of my Twitter feed the UK public would beg to differ.

This from UK tech site TechRadar – “Lots of anger about EE’s 4G pricing – if it was £36/month for 1GB, would that sway you? What would you be willing to pay?”

This from a punter – “If I switch to a 4G contract (still paying £36/month) my data allowance goes from Unlimited to 500MB! Kept that one quiet! @EE.” and “Over promising and over pricing! When will@ThreeUK have 4G.”

The Editor of PC Pro said, “EE has just blown all first-mover advantage with those ridiculous 4G tariffs. Shareholders must hold CEO accountable.”

And this from yours truly – “Initial reaction to @EE prices – they’re horrible. 5GB SIM only for £36? That’s a 260% hike on what I currently pay for data. I’m out. #4G.”

On the plus side there are some real positives. EE has said that tethering is allowed, as is VoIP and for £5 a month extra, the tariffs can be used when roaming across Europe and is several other selected countries, among which are Australia, China, India, Israel, Russia and the USA. In addition, free access to BT wifi is included, and as a value-add, EE is offering EE Film, which enables customers to stream one film of choice to any device a month, without impacting their data allowance.

The fact that despite promises that EE would only place a modest premium on LTE, these are in fact premium prices for a premium service. The mass market will have to wait for the other networks to join the LTE party (and if you’re an die-hard iPhone fan that will mean an iPhone 6 will be required  – the iPhone 5 will not support 800/2.6GHz LTE).

From a pure industry perspective, EE’s rivals in the market should be pleased with EE’s pricing strategy. Theyr’e not too low that all the value has been taken out of the market at the start, and there’s scope for them  to be more competitive when their services come online.

When that happens EE will be likely to be forced to lower prices, but for now, the price levels indicate that it is trying to take as much advantage of its first mover position as possible to generate revenue. That‘s good news for the industry – but less so for the consumer.

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