UK operator EE has unveiled its details of its first 4G tariffs ahead of its launch on October 30th. The operator will offer:
- Contract customers 4G access from £36 per month for 500MB data, ranging up to £56 for 8GB. All EE 4G tariffs include unlimited texts. The data caps represent a 'hard cap' where access is cut off once a user reaches the cap until the user purchases a data add-on.- SIM only offers plans for £15 per month less than the standard 4G contract tariff.
- Separate mobile broadband tariffs for tablets and personal hotspot devices, with similar tight data limits.
- All EE handset data plans will include access to BT's WiFi network and the option to tether (share a mobile data connection with another device) and to use VoIP (e.g. Skype) services over the mobile network. On most operators tethering is usually costs extra and VoIP is blocked on many mobile networks including Orange and T-Mobile.
- EE also unveiled its fixed line fibre broadband pricing with a discount for customers taking both mobile and fibre services.
EE intends to use content and services to market its 4G LTE network launch:
- A new movie service will launch as part of its 4G push. Replacing the existing Orange Wednesdays (two-for-one movie tickets) and Film To Go (free weekly iTunes movie download) for EE 4G customers, EE's new film service will offer users one free movie rental of their choice per week to download or stream from its 700+ catalogue, until February 2013. The data used for movie access does not count towards the users' monthly data limit.
- The film service also offers two-for-one weekly cinema tickets, available via SMS and a dedicated film app that also includes listing information and movie trailers. FilmFlex (a joint-venture between Sony Pictures and Walt Disney) will power the service, which enables customers to pause and resume viewing across a range of different devices (smartphones, tablets, PCs). Existing FilmFlex partnerships include on-demand UK movie services from Film4, Virgin Media and retailer HMV. Customers can opt to pay for movies via their EE bill or credit and debit card, the EE Film store is also available to customers of other mobile network operators. EE has yet to provide detail on which devices the service will support.
- EE 4G customers paying £41 per month or more will also gain access to bundled content offers previously available as part of the Orange "Swapable" deal. Customers can choose from on-demand music (powered by Deezer), TV, and games services.
EE's 4G proposition also includes: a new "Expert service" offer for 4G customers promising fast and direct access to dedicated advisors; Clone Phone - a back up service for contacts, calendar and personal photo and video; 14 day phone replacements and loan phones (next day for business customers) via "Repair & Loan Phone"; new 4G plans for business customers starting from an additional £3 per month on top of existing business plans.
EE is clearly targeting the high-end of the UK mobile market with not just a faster mobile network but plans with a wide variety of extras for its customers. At £36 however, the cheapest plan is 50 per cent higher than the average UK monthly mobile spend of £23.57.
EE's data buckets range from this very low 500MB to 1GB, 2GB, 3GB, 5GB and up to a maximum of 8GB. They plan to offer no unlimited usage option. These volumes are broadly in line with existing 3G data caps but the faster 4G speeds make it possible to use all of this data very quickly. If EE provides an average data speed of 10-12Mbps, as they expect, then it would be possible to run through 500MB of data in under ten minutes. This is too small a data limit for a 4G service and EE would be wise to raise the amount to avoid customer disappointment.
For Verizon in the US, a more mature 4G operator, 35% of its data traffic comes from 4G devices despite such devices making up only 16.5% of its base. This indicates that 4G devices use approximately 2.5 times the average data traffic of other devices.
The limited caps will curtail the attractiveness of faster speeds as consumers will be wary of going over their data limits. The hard cap makes this prospect worse as users will not want to face being cut-off at any time. As such, IHS Screen Digest expects the data caps to have a chilling effect on many data heavy applications such as tethering, HD video streaming, large file downloads; unfortunately for EE, these applications represent the key benefits of 4G speeds. For tasks such as updating Facebook, posting to Twitter or sending an email a 2Mbps 3G connection is fast enough for most consumers and IHS Screen Digest expect this 'good enough' mentality to inhibit 4G adoption.
EE is right to use content as part of its value proposition to persuade customers to adopt 4G services. Offering 4G users one free film of their choice per week, including new releases, will prove a compelling offer if marketed correctly. But EE weakens its 4G content proposition because the data limits mean the vast quantity of third party content providers' video, music and games content will not benefit from the 4G network due to the tight data caps that will inhibit their usage.
IHS Screen Digest believes that many UK customers, will consider current 3G services "good enough" in the short to medium term, and so they will not feel the need to pay a premium for 4G service and sign a new contract.
Ensuring that the EE Film Store downloads do not count towards a users' monthly data cap when downloaded over the air (OTA) is a good move. IHS Screen Digest research indicates that the typical size of an HD film ranges from 1GB to 4GB (half EE's maximum data limit). Even a standard definition film may be as much as 1GB, or twice EE's lowest data limit. As such, EE's Film store will not drive significant additional revenues from OTA movie downloads if the data incurred were deducted from a user's monthly allowance.
The weekly free film will prove an important part of EE's initial 4G promotion, but when the promotional period ends in February 2013, EE and its competitors (launching later in 2013) will need to find new ways to innovate with data and content promotions to further drive 4G adoption.