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O2 Brings LTE Competition to the UK This Month

by Philip Kendall | 8月 01, 2013

Telefonica's O2 has announced a 29th August launch date for its UK LTE network, signalling the end of EE's ten month exclusive 4G play. With UK regulator Ofcom announcing this week that analogue TV signals have now completely vacated the band, O2's 800MHz network will cover five million people at launch in London, Leeds and Bradford. It will expand the network at a rate of two million people per month, with 13 cities to be covered by the end of 2013, and is sticking to its target of 98% 4G coverage by end 2015.

Tariffs will start at GBP26/month, higher than EE's GBP21/month SIM-only plan, though O2 has yet to reveal what is bundled in at that price. What seems clear, and what we expected in our recent report "Monetizing 4G LTE: Evolution of Pricing & Go-to-Market Strategies", is that this pricing level is consistent with one of the two standard 4G pricing approaches we have seen in Europe so far:

  • LTE priced with a premium/surcharge over 3G services;
  • LTE positioned at the higher end of standard tariff ranges.

O2's existing 12-month SIM-only tariffs range from GBP8 (100 minutes, unlimited text, 100MB data) to GBP26 (unlimited minutes/text, 2GB data) and it seems likely that O2 may have combined the above two approaches, rather than positioning LTE exclusively within its highest-level tariff. In a market where Three has already stated it will not charge a premium for LTE, it will be interesting to see more details on the O2 tariff range to see how the landscape will evolve in the medium term.

Irrespective of that detail, EE is unlikely to waiver from its premium LTE pricing approach. It is increasingly focused on talking up the performance and potential in its LTE network and, with its impressive spectrum holdings, its "biggest and fastest" claims are unlikely to be challenged any time soon. O2 has already acknowledged that it won't be able to match the speed in EE's "double speed" (2x20MHz) LTE locations, though its 2x10MHz in the digital dividend band at least allows it to build out rapidly. O2 will ultimately need to deploy LTE in higher frequency bands to meet bandwidth demands in urban areas (buying capacity off other players, or refarming its own spectrum), though it is worth noting that the LTE announcement comes in the same week that Ruckus Wireless announced an expansion of its relationship with O2 Wi-Fi. However well LTE develops, Wi-Fi will remain a key part of many mobile operators' data strategies.


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