Posts tagged ‘pricing’

LBO or not, I want to break out… (Part II)

This is Part II of Peter Nas’ blog post on local break out technology

 

Peter Nas serves as Senior Solution Architect at F5 Networks and draws from more than 20 years of telecom experience to advise operators how to leverage Diameter signaling solutions to enable the optimal LTE experience. Peter joined F5 with the company’s acquisition of Traffix where he was responsible for global business development.  Prior to joining Traffix, he worked at Tekelec focusing on market development for Diameter and SIP routing. In his days before Tekelec, he served as Core Network Engineering Manager at a prominent mobile operator in the Netherlands.

In my last blog post, I began looking at the slow progress for the deployment of LBO (local breakout) technology that will reduce mobile roaming revenues. In this post, I will suggest various ways to leverage LBO to offset the reduction in roaming revenues.

One interesting aspect of LBO is that the signaling for two additional Diameter interfaces, S9 for policy and Gy for charging, could be exchanged between visited and home networks, and if so, this will be done via an IPX network as per GSMA guidelines (IR.88). There are different views on whether or not using the S9 interface to exchange policy information between the visited PCRF and home PCRF, will be massively used once LBO is offered, but let’s assume it will be used. In this case, an IPX carrier can offer various services around Diameter interworking, security and perhaps also screening, overload control, prioritization and potentially adapting policy rules and more.

(more…)

LBO or not, I want to break out… (Part I)

This post is by Peter Nas, Senior Solution Architect, F5 Networks

Peter Nas, Senior Soltuion Architect, F5 Networks

Peter Nas, Senior Solution Architect, F5 Networks

 

For over ten years, the technology to offer local breakout (commonly known as LBO) has existed, allowing data use by roaming customers to be supported by the visited operator’s network. This is in contrast to the scenario in which data requests are sent back to the roamer’s home network, which of course, results in higher costs. However, despite the obvious fact that many people would like to get lower data roaming rates, a wish not limited to Europeans traveling in the EU, sadly it is not offered yet.

 

(more…)

Voice roaming needs innovative change

Itsuma Tanaka, Lead Core Network Architect, Core Network Development Department, NTT Docomo

Itsuma Tanaka, Lead Core Network Architect, Core Network Development Department, NTT Docomo

This post is by Itsuma Tanaka,  Lead Core Network Architect, Core Network Development Department, NTT Docomo

Do you actually voice roaming when you’re abroad?

When you’re calling somebody from the LTE Asia 2014 venue, or when you sit in Starbucks on the high-street, or when you’re relaxing in your hotel room—or even when you’re surfing on the sunny Maldives beach, – you generally would use free Wi-Fi and Skype.

Recently, the EU introduced new regulations that cap prices for roaming phone calls leading operators, especially in the EU region facing fears of (even more) reduced revenues. They have to reduce prices, whilst maintain existing systems.

(more…)

Interview: General Manager, LG U+, “I believe we can compete with OTT services.”

Seunghyun Sung

Seunghyun Sung, General Manager, LG U+

Seunghyun Sung, General Manager, LG U+ is speaking on the subject of how the Korean operator has led the way on implementing VoLTE on Day One of the second annual LTE Voice Summit, taking place on October 7th-8th 2014 at the Royal Garden Hotel, London. Here she gives us some hints on how VoLTE can add to customer satisfaction and enable it to compete with OTT providers.

What are you expecting and hoping for from the commercial launch on VoLTE?

We currently provide seamless and intelligent communication experiences to our customers through our commercial VoLTE network. Since our customers use voice call features in an LTE environment, by making full use of the advantages that LTE/VoLTE technology provides we are able to offer many differentiated features. For example, we have a service called Uwa, which enables users to have a phone conversation, while using third-party apps for gaming, web surfing etc.

As we approach commercial launch is there any clearer idea of whether VoLTE will truly compete or just complement OTT services?

(more…)

Interview: Mobile data & Broadband Services, Vodafone Fiji Limited: “Big data analytics opens up a whole range of new possibilities.”

Santosh Payal, Manager for Mobile Data and Broadband Services for Vodafone Fiji Limited

Santosh Payal, Manager for Mobile Data and Broadband Services for Vodafone Fiji Limited

Santosh Payal, Manager for Mobile Data and Broadband Services for Vodafone Fiji Limited will be discussing optimal LTE pricing in his presentation on Day Two of the 9th annual LTE Asia conference taking place on the 23rd-25th September 2014 at the Marina Bay Sands, Singapore. 

Are billing systems keeping pace with changes in how MNOs now charge for data?

Billing vendors are trying to keep up with the phenomenal growth of data and the need to support different charging mechanisms. However, the data market dynamics are such that it makes them hard to cope with these changes and implement them in a short time. The constant billing system updates also comes at a cost, with which most of MNOs are not willing to keep up. We believe the flexibility in billing platforms should be increased, thus enabling MNOs to create their own service/charging logic without going through the pain of frequent investing in billing platforms.

(more…)

Senior Manager LE Mobile Pre & Post-Paid Marketing Commercial, Du: “It is of utmost necessity to have a continuous program of analysing your market and offering customized packages accordingly.”

Lee Lin Liew, Senior Manager LE Mobile Pre & Post-Paid Marketing Commercial, Du

Lee Lin Liew, Senior Manager LE Mobile Pre & Post-Paid Marketing Commercial, Du

Keeping ahead of your customers’ needs is important for an operator that wants to stay ahead of the market. Find out more about this from Lee Lin Liew, Senior Manager LE Mobile Pre & Post-Paid Marketing Commercial, Du, who is a discussion leader at the Operator Mind Share 2014, taking place at the LTE World Summit on the 23rd June 2014, at the Amsterdam RAI, Netherlands.

Can LTE continue to be expected to generate significant ARPU over 3G?

Yes I believe so. LTE rollouts and its subscriber base are gaining momentum. LTE can also support a couple of new business models such M2M, smart cities, and eMBMS, which could generate better revenue than UMTS.

(more…)

LTE Webinar: Pricing Strategies

map-latin-america-370x229If you’re interested in any way in LTE pricing strategies then you’ll want to check out this upcoming webinar, focusing on the LATAM region.

2013 has seen a steady increase in the number of LTE deployments in Latin America. The region now has 24 live networks, and 2014 is set to keep up the momentum. For instance, six new 4G networks are expected to be rolled out in Colombia alone, and other countries are planning to auction the highly-prized 700MHz spectrum.

(more…)

Broadband is costly in the USA – is it the same for LTE?

While fixed broadband is priceir, LTE contract pricing in the US seems on par with the UK

While fixed broadband is pricier, LTE contract pricing in the US seems on par with the UK

Earlier this week the BBC web site ran an interesting article asking the question why the price of broadband was so much higher in the US than it is in the UK. Research has found that packages are around three times more expensive than they are in the UK, and that in surveys comparing broadband prices the US is often to be found close to the bottom of charts. Considering the US is the country that is traditionally credited with inventing the Internet, this might well come as a surprise for some.

Traditionally technology tends to be cheaper there and to a large extent that’s still the case. Take the newly 13in Macbook Pro: it’s £999 here in the UK (including VAT), but including a typical New York sales tax costs the equivalent of £815 in the US. Not so broadband, where as you can see in the chats in the BBC article, the US is at the bottom of the list for purchasing power parity for broadband at 45Mbps or above.
(more…)

Can UK 4G harness its own hype?

Julia Kukiewicz, editor of Choose.net

Julia Kukiewicz, editor of Choose.net

This post is by Julia Kukiewicz, editor of Choose.net, a UK consumer site that has covered the consumer broadband market since 2004.

By the end of this year, all of the major UK networks will be selling 4G.

As with most nascent services, providers will have to walk a fine line: build consumer expectation too high and you’re paving the way for disappointment and sluggish take up; under sell the benefits, and the result will be the same.

There’s no doubt that 4G services are, and will be, far better in terms of speed and coverage than the mobile broadband most of us are used to.

But, as the 3G roll out showed us clearly, a better service won’t save users from disappointment.

And, as consumers use mobile internet more and for more complex, data-hungry tasks, technically better doesn’t always equal a better experience in any case.

So, leaving technical aspects of the service aside, how can 4G providers give consumers enough inducement to switch without overselling? How can they harness their own hype?

(more…)

Interview: Safdar Imam Hyder, senior costing specialist at Omantel, Oman: “US operators are doing it better and Omantel should learn its pricing lessons from them.”

Safdar Imam Hyder, senior costing specialist at Omantel

Safdar Imam Hyder, senior costing specialist at Omantel

Safdar Imam Hyder, senior costing specialist at Omantel is appearing on Day Two of the of the LTE World Summit, the premier 4G event for the telecoms industry, taking place on the 24th-26th June 2013 at the Amsterdam RAI, NetherlandsAhead of the show Hyder tells us how device launches are boosting excitement for LTE in the region amongst consumers, how LTE is a revenue opportunity for operators and why RCS services are critical for operators to be able to compete with OTT.

What major developments have there been with regards to the LTE industry in your region this past year?

We are witnessing a broadband explosion in the MENA region, especially in the GCC where broadband revenue has been growing steadily at a double digit rate over the last three years. Telecoms revenue in the Middle East and North Africa (MENA) is expected to grow by 27 per cent between 2012 and 2017 according to Analysys Mason, mainly due to data on 3G and 4G networks rolling out faster and faster.

Since the first launch of LTE in Saudi Arabia in September 2011, LTE has been launched in all the GCC countries such as UAE, Qatar, Oman, Kuwait and Bahrain. Here in Oman, LTE deployment is in full swing with both the tier one operators Omantel and Nawras launching – Omantel using both TDD and FDD and Nawras using FDD. Roll-outs have been accelerated in 2013 after the TRA issued spectrum licenses to both the operators at 1.8GHz.

The LTE World Summit, the premier 4G event for the telecoms industry, is taking place on the 24th-26th June 2013, at the Amsterdam RAI, Netherlands. Click here to download a brochure for the event.

Omantel, a pioneer LTE service provider in the Sultanate of Oman, has announced the launch of the second phase of its FDD 4G LTE network with coverage extended to new areas. With the latest LTE devices launches from Samsung, BlackBerry and Huawei, LTE fever is catching up fast with the general users in the Omani market, especially with the youth in the gaming and video applications. Expectations are high for launches of newer devices and Omantel is progressing well on expanding LTE 4G coverage to almost all major cities of Oman by the third Q313, with its vendor, Huawei.

Pricing for LTE is a controversial subject. Are operators getting it right?

I see LTE as an opportunity to boost ARPU for operators, but it all depends on pricing. Ever since the advent of the technology, billing and charging systems have been riding a wave of change. If Omantel is able to adapt to the new ecosystem we can lead our market to a new era of data connectivity and technological advancement; what is known as the “smart society”. This country has all potential parameters for developing as an e-society with one of the highest ratio of utilised bandwidth per user.

The biggest challenge that operators here are now facing is to get their charging models right. Having learned from their 3G experiences, we know that unlimited offers are a risky proposition in LTE era. In a recent survey, out of 65 operators polled, only three per cent are offering unlimited plans. The combination of new billing options and reluctance to offer unlimited plans is bringing about a new wave of pricing innovation.

Most of the pricing alternatives currently used for LTE are conventional in concept except those of shared plans. Simply, already implemented pricing schemes are being perfected and developed. However, LTE pricing is still in its infancy, evolving differently in various regions. As LTE pioneers European operators are wary of unlimited pricing and have opted for LTE rental premiums in the range of 50-80 per cent, with unit costs per megabyte of almost half compared to rest of the world.

US operators, after an initial fumble in the race to launch 4G networks, are developing new pricing models. They are choosing to be technology-agnostic and have opted to price the new generation telecoms access (mostly data) according to the number/type of connected devices and the data volume consumed. This provides users with an affordable way to use data either stationary or on-the-go and for operators to increase revenue per customer. In my opinion US operators are doing it better and Omantel should learn its pricing lessons from them.

Do you think that LTE offers great opportunities for monetisation or does it present challenges?

I think LTE or any high-speed mobile data network offers great opportunities for monetisation. This is because mankind is undergoing an amazing ‘mobile revolution’. Every day we see new upcoming developments in fields like mobile video, social media applications, mobile marketing, mobile health, mobile money and M2M, and all are made easier via LTE. Both the clients and consumers side have great business need for LTE and there is immense potential in that. But the challenges are fierce and unequal competition with OTT providers, whom are more focused and faster at executing on services and product development. As such, mobile operators are in great danger of becoming simply utility service providers with low-value dumb data pipes for third parties.

Do you believe that RCS services can genuinely help the industry compete with OTT?

Internet penetration is growing massively in Oman with more than two million users. OTT services such as Viber, PalTalk, Google Talk, MSN Messenger, and Yahoo Messenger have already been unblocked in Oman by a memo issued by the Oman TRA to all operators in April 2012 and are now easily accessible on desktop and mobile devices. Skype might also follow the suit.

RCS does provide a competitive advantage to MNOs by introducing IP-based communications services to their own platform and enabling them to compete with OTT service providers. Realising the importance of multi-service IP network in the lives of the people and the economy in general, regulators all over the world are aggressively protecting or promoting OTTs. As these OTT players eat into traditional telco revenues, technologies such as RCS provides a solid foundation for crafting a compelling user interface, building a brand around services and incorporating differentiating features that most operators traditionally do not seem to be good at.

According to Jeremy Green, a principal analyst in Ovum’s Telco Strategy Practice, by 2020 VoIP alone will have cost the global telecoms industry $479bn in lost revenues. Therefore the importance of adopting RCS is all the more critical.

EE bah gum: it’s fast! – EE LTE on test

ee_iPhone

As my day job involves writing about LTE on a pretty regular basis (as in every day) I always found it quite ironic that up until recently I’d never experienced an LTE network ‘in anger’. Come October last year and UK operator EE changed all of that. It’s taken a while but I’ve finally succumbed to the temptation and signed up to the service. This means I’ve done the full tour of UK operators. I started with T-Mobile in 1998 when it was still One-to-One, later moved to Vodafone (just for 3G – yes really), before moving to O2 (cheap). It means Orange is the only brand I’ve not been billed by, but I am at least now using its network.

Today the UK operator EE released its first figures since the operator launched its LTE network, and analysts have been fairly downcast on the figures, which show a decline in revenue of 2.6 per cent to £5.96bn. There have been an increase in post-paid subscribers to the service, the EE network includes the Orange and T-Mobile brands, which are 3G only. As EE has not released figures for the number of its new 4G EE customers there’s no way of knowing to what extent LTE has helped. The assumption from analysts though is that if EE has something to crow about, it would be doing so.

So what’s keeping the punters away? The only conclusion can be price. As you might have heard, there’s a double-dip recession on, which is not the ideal environment to get consumers to pay more for faster speeds, especially when they are as heavily capped as EE. Remember the entry-level cap only gives you 500MBs to play with and though the price has dropped to £31, it’s still pricey. To get a decent 3GB on a two-year contract with an iPhone 5 will cost you £46 a month with £99 for the phone.

But is it worth it?

The one thing I can confirm is that it’s fast. In areas of good coverage, which fortunately for me includes both work and home, LTE on an iPhone 5 delivers speeds that consistently put my Virgin broadband 60Mb connection to shame. Speeds of 30Mbps on the downlink and in excess of 20Mb on the uplink are a breathe of fresh air, especially coming from O2’s 3G network which at least for me, was pretty dire, rarely delivering more than 1.5Mbps.

What surprised me was how much difference it made even for the simple things, such as sending iMessages. The progress bar on messages just zips across, making for more natural conversations. Adding a picture to an iMessage used to mean a long wait while the message was painfully uploaded. Now, they go so quickly that the first time I had to check it had actually been sent and hadn’t just failed. All that upload speed is great for sending or posting pictures and videos, which is what more and more of us are doing from our smartphones.

A lovely was to demonstrate LTE is YouTube. It just loads up and starts to play immediately, with no buffering. Suddenly the speed of your device and not the network is the limit. This was brought home to me just today. I was on the train, and had need to watch a YouTube video. Immediately I did so and for once I was not thinking about latency or cell towers, – just the video. This all changed as the video suddenly stopped. I checked and noted that I was at a stop that I knew was an LTE blackspot (West Hampstead Station). 3G was displayed on the phone, but the speed wasn’t there. Result: experience spoilt.

This does seem to be a problem for EE. Even in the West-End of London I’ll see LTE come and go, and while DC-HSPA 3G is fast, I’ve also seen standard 3G, EDGE and GPRS, which means that your handset might well have to cope with switching between five different network standards during the day. No wonder these smartphones struggle for battery life.

If you have to fall back to DC-HSPA though performance is good. In a recent interview with EE’s Principal network architect, Andy Sutton, I was told that as part of its upgrade programme EE also currently has 40 per cent coverage of DC-HSPA on its network, and I can attest to this being pretty solid. However, ubiquitous coverage of either LTE of DC HPSA is still a long way away and clearly improvements can be made in the hand-off between network technologies.

LTE is not just great for video though. Being something of an audio aficionado I enjoy listening to high quality audio when I can. LTE enables me to stream by 24-bit FLAC files to my handset from NAS box at home, with no issues at all, something that was simply impossible on 3G.

As a downside, listening to high quality files on an LTE connection is also a great way for draining your battery, so necessitated purchasing a charging cable for work and plugging in on a regular basis.

I’ve also used LTE as a backup connection at home, when my Virgin connection has ground to a halt, as it sometimes does. This is thanks to the ability to very easily tether via the iPhone 5 hot-spot feature. This was banned by GiffGaff, the O2 MVNO I used to be on, a point of frustration when there was unlimited data to play with.

In my first month I’ve come just under the 3GB limit, which is clearly the sweet spot for me – enough to use the LTE as I want, without having to worry I’ll go over the cap.

What’s also gratifying is the speed at which EE is rolling out the network. At launch it was just 11 cities, and just four months later it stands at 27 cities – with 15 more by the end of next month.

And while I didn’t come to EE because of the value added services I have made use of the bundled wifi, which gives access to BT Wifi hotspots, the ‘EE Wednesday’s Cinema 2-4-1 offer, and the EE Film store, with a free film a week available to download that doesn’t eat into your data package to download.

To be critical, the EE app has just got very confused about my data usage, telling me I’ve used only 800Mb of my 3GB, when yesterday I had almost used it all up. The web site also had no record of my data usage. I also wouldn’t recommend roaming without a pre-pay bundle – the prices are simply eye-watering. Digital Commissioner Neelie Kroes has been working on forcing operators to lower these charges, and for me that can’t come soon enough.

The Clone Phone Lite app also seems pointless. It’s redundant for an iPhone thanks for iCloud, it only comes with a 500MB cap and when I tried to test the app it didn’t recognise my phone anyway.

Overall though, the combination of very fast network speeds and some actually useful value added services, I’d describe the whole EE experience as the most premium feeling package I’ve ever used. Which considering the premium prices is as it should be.

It remains to be seen then how it pans out. I’m relieved that being lucky enough to have an unlocked iPhone 5 without a contract I was able to go for a SIM-only package. This means that I’m only tied in for 12 months – not 24 and come next year they’ll be a pick of other operators offering LTE – (though of course as the iPhone 5 is LTE1800 only I’ll need a new handset to take advantage of them). If I stay, I expect that EE’s packages will be more enticing to the mass market.

So EE: it is expensive, and it can be patchy but as a teacher once described my contribution in class – “when it’s there – it’s really there.”

A price war is coming

Price-WarIf there was any doubt that things are going to get tasty LTE-wise in the UK, it was earlier this week, when 3, the UK arm of telco brand Hutchison, announced that when it launches its own LTE network later in the year it will not be charging a premium. The implication was the users will pay exactly the same as they do now, and as 3 currently leads the market for low-cost unlimited 3G data, that’s a pretty enticing prospect.

It’s also one that shoots a considerable large volley across the bows of the good ship EE, which got itself in the LTE race early by launching a service in November. It was able to do so after pulling off the deft trick of getting the regulator, Ofcom, to let it re-farm its 2G 1800MHz spectrum for LTE.  Having bigged up the benefits of 4G at its launch it then proceeded to make the most of this by launching LTE as a premium service – with high prices for lengthy 24-month contracts with small data allowances, the latter of which the network took a lot of flak for in the press.

With the auction process for the digital dividend 800MHz frequency and 2.6GHz now underway, ironically pushed earlier by Ofcom to reduce EE’s 4G lead-time in the market, EE reacted by announcing lower prices for its entry-level tariff. Instead of £36 a month for 500MB of data it would now only charge £31 a month, which over a 24-month period that’s a significant saving of £90. The price of a handset such as the Nokia Lumia 820, would also come down to £29.99. However, the measly 500MB bundle would remain.

At the other end of the market it would cater for high-end users with a new 20GB a month tariff with a phone and unlimited calls for £61 or the same thing but SIM-only for £41.

It’s not quite the slashing of prices that some had reported though – just one real saving on the entry-level package.

3 is currently offering an iPhone 5 with unlimited 3G data and 2000 minutes for £36 a month, which is more or less the same, aside from 500MB of LTE data vs unlimited 3G. When both of these become LTE, EE will have a problem.

Of course EE does have a couple of decent added value services to offer, such as tethering, inclusive BT wifi, Underground wifi, 2-4-1 cinema tickets (better known as Orange Wednesdays) and  the EE Film Store – but it’s unlikely this will be enough to sway many people away from an unlimited package.

Of course EE does have one key advantage – it has an LTE network that is up and running with coverage is increasing all the time with new markets being announced on a regular basis. What EE needs to continue to do is keep up the marketing pressure on signing people up before the other come online with live networks – which will be around six months from now.

It might get a bit longer to play with as the iPhone crowd won’t switch to LTE unless they can use their favourite fruity phones. The current European model of the iPhone 5 only supports 1800MHz, so all the other operators will be looking at Apple to make them happy and release an 800/2600MHz LTE supporting iPhone next time round – which is unlikely to be until September/October 2013 – a year or so following the iPhone 5 launch.

When this happens one has to imaging that EE’s pricing will look somewhat different to what it looks like at the start of 2013.

Pricing strategies are certainly going to be one of the hot topics addressed at the LTE World Summit 2013, taking place in Amsterdam in June, so be sure to get your plans together now to attend.

EE puts LTE in January sales

This is a guest post by Mike Hibberd, editorial director at Telecoms.com, Mobile Communications International magazine and Banking Technology. Follow him @telecomshibberd

EE

Last year, with a deft move that left its competitors fuming, Everything Everywhere became the first UK operator to offer LTE services. This week, as Ofcom’s LTE spectrum auction got underway, Everything Everywhere has become—rather less auspiciously—the first UK operator to slash its LTE retail charges.

Most notable was the special promotion that will give customers 500MB of LTE data, and the standard unlimited domestic calls and texts for £31/month over 24 months with a handset for less than £30. That’s cheap.

At the high end, consumers that EE profiles as “super users” can spend £46/month for 20GB of data with a SIM-only plan if they sign up before the end of next month.

EE says that these are time-limited special offers but price-cutting tends to be a one-way journey. Even if these tariffs do revert to more significant premiums, other offers will take their place. Especially when Vodafone, O2 and 3UK deploy their own offerings.

These players, along with EE, are currently stacking their chips on the green baize of Ofcom’s gambling table. You wonder what they make of EE’s announcement as they weigh their wallets. It’s not the most positive of messages about the prospects for LTE operators in the UK—EE only launched in November and the prices are already coming down.

Unfortunately, and unlike the 3G auction, this game is being played behind closed doors so we won’t know if EE’s retail re-jigs will affect any other player’s valuation on the spectrum until the process has concluded.

We can draw a few conclusions from EE’s pricing tactics, though. First, the firm knows that its LTE lead is running out fast and it wants to wring every advantage from it that it can. Second, money is tight and the market is price sensitive at the moment. Third, and most worrying for EE and its competitors, faster network speeds just aren’t enough of a draw for consumers in the immediate term.

Consider that EE is cutting its prices in the face of no comparable network offering from any of its competitors. We’re used to hearing about price cuts because of intense competition; price cuts in a monopoly are somewhat less common.

The reality, of course, is that EE’s LTE network has plenty of competition, from the UK market’s 3G HSPA networks (EE’s own included).

Why should the end user pay even EE’s reduced rate of £31/month for 500MB of LTE data and a limited range of handsets when they can pay £26/month for 1GB of data at HSPA+ rates and get the Nexus 4 for free? This makes more sense financially to the consumer because consumers value the device more than they value the network.

Now this is bitterly unfair, because the network is the most complicated part of the mobile service and by far the most expensive to deploy and maintain. But it is a fact—and one that is unlikely to change any time soon.

Which is why operators need to be given as much flexibility as possible in their deployment of LTE networks. Ofcom is publicly committed to maintaining the number of separately owned and operated LTE networks in the UK market; it is one of the goals of this auction. And yet as our Telecoms.com Intelligence Industry Survey 2013 reveals, 65 per cent of respondents believe that network sharing is essential to the profitability of LTE. Not a useful tool to improve cost management, but essential to profitability.

EE will be speaking at the LTE World Summit, the premier 4G event for the telecoms industry, taking place on the 24th-26th June 2013, at the Amsterdam RAI, Netherlands. Click here to download a flyer for the event.

UK LTE – The Best is Yet to Come

This post is by Bengt Nordstrom, co-founder and CEO of strategic wireless business consultancy, Northstream,

The intense UK media coverage around Everything Everywhere’s (EE) LTE service launch could have fooled people into thinking it was the first launch of its kind. There are, in fact, a total of 113 operators with live networks across 51 countries, according to the Global Mobile Suppliers Association. EE is trailblazing a new path for the UK mobile industry, but this route is not without its controversies and challenges. Bengt Nordstrom, co-founder and CEO of strategic wireless business consultancy Northstream, discusses the UK’s first LTE network launch and whether EE’s gamble to go early will pay off.

4G or not 4G….

The UK regulator Ofcom, much to the consternation of rival operators, allowed EE to re-farm its 1800MHz spectrum to launch LTE services in October. However, prior to this, the regulator had earned widespread condemnation for displaying a lack of leadership in allowing the UK operator community to constantly appeal its decisions. This led to massive delays in the UK spectrum auctions taking place; which in turn has prevented commercial LTE service availability and left the UK trailing its European neighbours.

However, the UK is now catching up, with its first live LTE network. More are now set to follow, with the news that Ofcom will auction LTE spectrum licences, at a reserve of £1.3 billion. It is likely that the auctions will raise three of four times this amount of money. A staggering amount given the state of the global economy; and considering how energised the UK Government appear to be regarding LTE deployment. It seems an enigma why regulators make sense of taxing operators who are prepared to build out critical mobile infrastructure.

Despite the cost, these auctions will have the positive outcome that Vodafone, O2 and 3UK will now get their chance to launch LTE. At the moment though a marketing war has erupted – in which EE’s rivals scramble to differentiate themselves and retain their subscribers. For example, Vodafone has launched a £4.5m national newspaper campaign with the tagline “not all 4G networks are the same”; claiming that Vodafone’s signal will travel “further into your home” and is the only mobile network to “own a nationwide fibre backbone”.

A war of words is one thing, but it will be difficult for competitors to respond to EE’s latest move. Although UK 4G coverage is currently limited there is a genuine buzz among consumers about LTE, following the huge amount of publicity it has received. LTE is the service subscribers are keen on; and EE is offering that now. The reality is that operators will not have a fitting response to EE’s LTE offering, until they deploy LTE themselves next year.

The Price is Right?

EE’s 24 month LTE tariffs, ranging from £36 for 500MB up to £56 for 8GB, have drawn criticism on price and how much data they provide. Downloading a one hour programme on BBC’s iPlayer consumes roughly half the 500MB data allowance the lowest priced EE plan offers. It is commonplace for the first mover in the market to have the advantage. EE has done this by setting the bar high on its LTE tariff plans. However, this premium period should only last a short time. There will be a decline in LTE price plans as other operators enter the market. EE may potentially make an early move to lower prices as they seek to control the market as Vodafone, O2 and 3UK plan their entry.

Higher prices for LTE won’t trouble the initial audience; predominantly early adopters and corporate subscribers. There is also a huge market for LTE USB dongles. EE’s dongle tariffs start at £15.99 for 2GB, up to £25.99 for 5GB, and the device is available from free up to £49.99. This is an attractive alternative to ADSL from fixed line providers. Especially for residents of semi-rural areas who suffer slow speeds as they are far away from the switch. Young professionals living in shared accommodation will also find LTE dongles an easy, convenient and cost effective way to get online. This is a market in which EE can really outperform and provide challenging competition to fixed line players. Traditional telcos would have to deploy an increased amount of fibre to compete with LTE coverage; making it very costly for them to stay in touching distance of EE.

The Challenge Ahead

But deploying LTE does pose some technical challenges; and one of the biggest is backhaul. Fibre to the base stations is required to ensure they leverage LTE’s throughput capabilities. EE will need a lot of lead time to deploy fibre; and it is not an easily available off-the-shelf product. WiFi, a rapidly maturing and familiar technology, is not perfect, but could plug coverage gaps and be a solid foil for EE and its macro LTE network.

The other challenge is one that is unique to LTE over 1800MHz – limited indoor coverage. An 1800MHz base station grid just doesn’t penetrate buildings as well. It will be important for EE to deal with this issue as the majority of smartphone usage occurs indoors. Deploying base stations in buildings is not practical or affordable. Small cells remain a remote concept and a great deal more unrealistic than many perceive. Their unit cost, and the amount required, makes them increasingly unviable solution for operators. In order to provide a good user experience EE needs the combination of 1800MHz and 800MHz; with LTE deployed over 800MHz for better indoor coverage.

It will take time for EE’s LTE network to mature, but there was no reason it took such a long time to launch LTE in the UK. However, the country has not suffered due to the delay. Now 4G is live, the UK has a good chance of reaching the level the rest of Europe is at by 2014. But for a market with such a long tradition of being influential in mobile, the UK’s LTE delay has certainly dented its prestige.

Bengt Nordström biography

Bengt co-founded Northstream in 1998 and has been its CEO ever since. Prior to founding Northsream, Bengt held the position of CTO and Executive Director of Smartone in Hong Kong. Other management positions include Ericsson, Comviq and Netcom consultants. Bengt has also held been on the Executive Committee of the GSM Association as well as chairing its Asia Pacific Interest Group.

Pricing strategies will be a major focus of the LTE World Summit, taking place on the 24th – 26th June 2013 at the Amsterdam RAI, Netherlands. Click here to pre-register for the event

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.

Tag Cloud

%d bloggers like this: