Market Insight

Three UK extends free roaming to US, and makes UK 4G live at no extra charge

December 04, 2013

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Hutchison-owned Three announces an additional four countries (USA, Indonesia, Sri Lanka, and Macau) are joining its 'Feel at home' roaming plan which allows UK-based consumers to use their voice and data allowances abroad as if they are in their home country. These new territories make a total of 11 countries where the scheme is available. Unlike existing countries in the scheme, 3 does not operate its own network in the US and will be using roaming partners to deliver the service.

Also, 3 has launched its 4G network and existing customers living in areas with 4G service will be upgraded gradually over the next few months. As previously announced, 3 confirmed that 4G speeds will be available at no extra cost for consumers with 4G-ready devices via a software update. Initially, 3's 4G network is available in parts of London, Birmingham, Reading, and Manchester.

These moves highlight how aggressive 3's pricing strategy has become: While early mover EE offered 4G for a premium price, a year later 3 is offering 4G speeds in essence for free. The US roaming launch undercuts not just 3 UK's domestic rivals, but also most US networks' data pricing, even though they are operating in their home market while 3's service is roaming. For just £15 on pre-pay, with no contract commitment, 3 offers unlimited data to its UK customers. This tariff now works in the US too and continues to deliver unlimited data, for the same price, and at broadband speeds.

The extension of 'Feel at home' represents the next step in Hutchison's attempts to outflank its rivals with disruptive data pricing. In two of the new countries to join the tariff, Indonesia and Sri Lanka, Hutchison has wholly owned subsidiaries (Hutchison 3 Indonesia and Hutchison Telecommunications Lanka). But the US will be the first country in which 3 expands its 'Feel at home' programme where Hutchison group does not have a local mobile presence. Hutchison is partnering with roaming partners AT&T and T-Mobile to deliver 3G broadband speeds to its roaming customers. However, initially the service will not deliver 4G speeds.  

While 3 is the most disruptive operator on roaming, it is not the only operator to announce extended roaming plans. EE is bundling unlimited minutes and texts in select European countries, but is making this offer only available on its 4GEE Extra plans, which are a £5 premium on 3G-only plans, and a £3 premium over the standard 4GEE plans. T-Mobile US has also announced unlimited minutes, texts, and data in over 100 countries; however, it throttles data transfer to 2G speeds.

Three has delivered on the announcement it made earlier in the year not to charge a premium for 4G. By offering 4G speeds for free, 3 will not need to bundle content services, or add further value to compel consumers to its next generation network unlike the other 4G operators in the UK. It offers the cheapest 4G-ready plan that is even cheaper than Tesco Mobile, an MVNO from the UK's largest retailer that uses O2's network. In addition, unlike Vodafone, 3 plans to offer unlimited data to customers indefinitely, while Vodafone offers unlimited data only within a three month promotional period.  

As a 4G follower, 3 UK will benefit indirectly from the many 4G marketing campaigns run by EE, Vodafone, and O2, because it will have to focus less on explaining 4G's advantages to consumers. Thanks to complimentary 4G access for all 4G-ready handsets, IHS expects 3 to see the fastest initial adoption of 4G users across all the UK operators. For this reason, 3 will need to focus on building out its network quickly to match the coverage and data speeds offered by EE.

Indonesia UK USA
EE Hutchinson T-Mobile
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