Fortunes of 4G in the hands of the handsets

After long delays, 4G data is finally ready to roll out across UK mobile networks. But it will be devices such as iPhone 5 that drive take-up, not the 4G services themselves.

Michael

Mobile operator EE, owner of the Orange and T-Mobile brands, has got a head-start on the competition after being given the go-ahead to start using the 4G frequencies it already owns. Other operators have to wait until spring 2013 to bid for parts of the radio wave spectrum that used to be taken up by analogue TV signals.

But it’s not the early-mover advantage that will benefit EE most – it’s the fact that it will be one of only two UK operators able to offer 4G services on Apple’s iPhone 5. The handset won’t work in the 4G frequencies available for O2 or Vodafone to buy.

Three will be EE’s only 4G competitor on the device. But Three doesn’t plan to launch its 4G network until 2013, so EE will have up to six months of offering effectively exclusive contracts on the device.

EE hasn’t released details of its 4G tariffs, but it seems certain that 4G is going to be sold as a premium service – initially, at least. EE tells Orange and T-Mobile customers on its website that, when moving over to the new parent brand, “you may need to pay more than you do today”.

If this premium price strategy is going to succeed, EE will have to use its exclusivity on the iPhone 5 as a selling point, because there’s nothing particularly tangible about the benefits of 4G – especially since 4G coverage will only roll out in stages, starting in cities.

The 4G sales proposition, in simple terms, is ‘the same but faster’, which is unlikely to be enough to get consumers converting in droves and paying higher contract prices. But telling them you have the only network where they can use the full capabilities of their new, shiny, expensive iPhone will be.

O2 and Vodafone will undoubtedly be trying to convince Apple to make iPhone 5, or its immediate successor, compatible with their 4G networks. But until then, they might need to nail their colours to the mast of another manufacturer willing to make devices exclusively for their networks.

If not, they need to find something else to make their 4G offerings competitive, which should be an even more pressing priority than getting the technical infrastructure ready. All that springs to mind is exclusive content, or otherwise, price.

Whatever they hit upon, the battle should be an interesting one – and it ought to be good for forcing operators to innovate around 4G data.

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