Taking a look at how 4G changes the mobile landscape
Most of us have come to terms that 4G will be making some big changes to our lives and how we access data services on the move, but are you aware of the impact it will have on the competitive landscape?
A report by independent research firm Yankee Group investigates just that.
Mobile network operators (MNOs) have been fighting to release their services as quick as possible, whilst offering the fastest and most reliable service. Although this certainly helps to gain an advantage, it’s not the only way to ensure a competitive solution.
Declan Lonergan, Yankee Group VP of research and author of the report comments: “The implications of ubiquitous 4G networks and connectivity will be far-reaching and touch everything from data pricing to brand positioning and emerging business models.”
He continues: “Gradually 4G will stop being something new and will become the new norm—just as happened with 3G technologies a decade ago. But until that happens, 4G represents a discontinuity that brings with it the usual mix of opportunity and risk.”
Starting at the beginning; getting to market first is clearly advantageous as to any business. The extra time can be spent re-affirming the brand as being forward-thinking, reliable and preferably, cost-effective.
The report suggests pricing should not be more than a 5 – 10 percent premium over existing 3G services.
In the UK, EE’s initial pricing was well above this margin. The 24-month “Panther 20.50” contract which offers 500MB of 3G costs £20.50/month, and is considerably less than the comparative 24-month 4GEE contract which offered 500MB for £36/month.
“4G leaders must also be careful not to introduce too large a premium for 4G services. This will serve only to limit adoption while their competitors move closer to their own 4G launch dates.” – Cited from the report.
The headlines certainly agreed with Yankee Group; with many publications calling the services overpriced.
In the face of upcoming competition by rivals O2 and Three - who are expected to launch their own services in the next few months - EE has slashed the price of the contract to £26/month.
Yankee Group also recommend - where possible - not charging any premium for 4G services; something rival MNO Three has announced will be the case for their current “All You Can Eat” plan subscribers.
According to the report, implementing proactive migration strategies to 4G by current 3G customers is a requirement; as is improving 4G services first at a rapid-rate.
The report suggests: “This can include deploying LTE-Advanced, carrier aggregation and voice over LTE (VoLTE). For example, EE announced its plans to double 4G speed and capacity across 98 percent of its network by 2014, and it made this announcement well in advance of its rivals’ 4G launch dates."
Branding plays a major part in consumer awareness and perhaps choice. 70 percent of people know EE (who claim it’s the fastest awareness of a mobile network in the UK) and most interestingly, 45 percent of people associate EE with 4G.
This represents a huge opportunity for EE; who is likely to be seen as the pioneer of 4G in the UK.
So should all brands simply create a new brand similar to how Orange and T-Mobile created EE in the UK? Not necessarily. In most cases it’s better to use – and build upon - a trusted brand.
“TeliaSonera adopted this approach. By being the first operator in the world to launch commercial LTE services for consumers in Sweden and Norway at the end of 2009, the company ensured its brand remained synonymous with technology leadership.” – comments the report.
A surge in connected devices will present a new competitive challenge, whether through “tethering” (which not all MNOs allow) or direct cellular connections found particularly in 7 – 8 percent of all tablets.
The biggest usage according to Vodafone’s Annual Results Presentation in May 2013 is through Laptops; at an average of over 1.5GB/month. This may suggest consumers using data connections to gain internet access in rural locations where fibre may not be available.
Value-added services included in bundles will also help to sway the decision on who offers the best choice. TIM in Italy, EE in the U.K. and Vodafone Germany; have all added extra entertainment services, Wi-Fi access, cloud storage, or roaming to their offerings.
One of the most desired new additions is of “shared” plans; whether between individuals (e.g. family members) - or between devices (e.g. tablets, laptops.)
With 4G, a new opportunity arises for moving away from pre-paid to post-paid contracts; especially through the offering of desirable devices exclusively on a post-paid contract for a limited time. EE used this tactic with Nokia’s Lumia 920; offering the desired Yellow version exclusively on contract with their network for a period.
For the full, in-depth report and all of Yankee Group’s findings - sign up here.
What do you think about MNO’s rollout of 4G and Yankee Group’s research?
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