Editorial

4G UK: the high price of EE's monopoly

At the end of this month, the United Kingdom will finally join an elite group of nations with the launch of its first 4G LTE service. While the United States, Australia and many more countries dotted around the globe have all enjoyed 4G services for some time, the UK has lagged far behind many others in its next-generation mobile strategy.

Indeed, the sad truth is that the UK’s 4G spectrum auction – which will allow network operators to bid for the licences to operate LTE services throughout the country – has not even taken place yet, and will not do so until sometime next year. The UK’s first 4G operator, EE, has been granted special dispensation by the telecommunications regulator, Ofcom, to convert some of its spare network capacity for 4G services, using bandwidth freed up by the company’s two 3G carriers, T-Mobile UK and Orange UK.

With other operators unable to offer 4G services until they acquire spectrum in 2013, EE will be the UK’s only 4G carrier until well into next year. Given the eye-watering pricing that the company has just announced for its tariffs, it’s clear that this 4G monopoly is bad news for consumers, and yet more bad news for the deployment and adoption of 4G services throughout the UK, which are already languishing embarrassingly far behind so many other nations.

Before we look at the new 4G tariffs, let’s remind ourselves first of some of the price plans that EE currently offers its 3G customers through its T-Mobile UK brand. T-Mobile offers what it calls ‘Full Monty’ tariffs, including unlimited voice calls (with certain exceptions), unlimited text messaging and – crucially – unlimited data:

 

Now, let’s take a look at EE’s new 4G tariffs in more detail:

 

So, let’s compare what you can get for your money at, say, £41 a month. On T-Mobile 3G, you can get unlimited everything – including unlimited data – with a Samsung Galaxy S III LTE (yep, T-Mo will sell you a “4G-ready” handset even on your 3G tariff) for £29 upfront. On EE 4G, for £41 per month, you’ll get unlimited SMS and voice calls, but you won’t get unlimited data. Instead, your 4G data usage will be capped at 1GB (with unlimited WiFi via BT Openzone hotspots); that Galaxy S III LTE will also cost you an extra £20.99, with EE demanding £49.99 up front.

The handset price disparity makes even less sense at £46 per month. If you want a Galaxy Note II LTE with that monthly spend, it’ll cost £39 upfront with a T-Mobile 3G contract, but £89.99 for the same 4G-ready handset with EE. Let’s just dwell on that for a moment, and let it sink in: an identical 4G-ready handset can be purchased for £50 less with an equally-priced 3G contract (and no, you won’t even be obligated to upgrade to a 4G tariff if you don’t want to). Why does the same 4G-ready handset cost £50 more, from the same company, on a 4G contract? Who knows?

Even at EE’s top monthly tariff, costing £56 each month, you’ll only get 8GB of mobile data included (along with the unlimited WiFi access offered on all 4G plans). That’s a far cry from the unlimited, uncapped data offered at 3G speeds on T-Mobile for £20 a month less. Indeed, when T-Mobile offers unlimited everything for a lower monthly spend, with a lower upfront cost for handsets, it’s hard to understand the appeal of paying dramatically more for increased speeds that will propel you towards your new data cap at a much faster rate.

EE will let you know when you’re approaching your limit, and again when you’ve hit the buffer; after that, you can either go without mobile data usage for the rest of the month, or buy a data add-on. But with prices ranging from £3 for a 50MB add-on to £20 for an extra 4GB, one must surely wonder how serious EE is about driving a data “revolution” for the UK with 4G, as the company’s CEO, Olaf Swantee, promised at the EE launch press event last month.

Meanwhile, tethering is included free of charge on all EE 4G plans – although it’s worth bearing in mind that, when the company launched the T-Mobile Free Monty plans earlier this year, they also included free tethering, but new customers must now pay an additional fee for this option as it is no longer offered free of charge.

Customers who have recently purchased a 4G-ready phone via T-Mobile or Orange will be able to migrate to a new EE 4G tariff – under a new contract – with no extraneous fees. In a genuinely impressive offering, any T-Mobile UK or Orange UK customers who have purchased an Apple iPhone 4S, Samsung Galaxy S III or HTC One X via either brand – and who are in the first six months of their contract – can choose to pay a one-off fee of £99 to upgrade to a brand new 4G-ready iPhone 5, S III LTE or HTC One XL, if they are migrating to a 4G tariff with EE.

Compared with its 3G offerings, EE’s 4G tariffs evidently offer less for your money, but at much greater speeds. EE calls this “simple pricing for the digital consumer”, “putting the customer in control”; in practice, consumers may well find that the idea of being offered a service that by its very nature encourages greatly increased data usage, with such meagre data caps and such costly data add-ons, is hardly the kind of control that they seek. The steep pricing is even more incredible when you consider that it will be over two years – the lifetime of most contracts – before EE’s 4G service approaches full geographical coverage of the UK, and in the opening months of your contract term, you may well find yourself leaving 4G areas frequently.

Just yesterday, we reported on a UK survey which had found that only 15% of respondents were willing to pay a premium for 4G mobile services, with 48% declaring that they had no plans to pay any premium over 3G. Of course, most people will have anticipated that EE would charge a modest premium for its 4G service – it was hardly going to give away what it genuinely needs to charge for, in order to fund the development of its 4G network across the United Kingdom over the next few years.

But the premiums that EE seeks to charge appear far from modest; indeed, they appear unnecessarily punitive towards early adopters, and completely at odds with the company's bloviating about how its 4G tariffs are “designed for 21st century consumers and businesses”. One is left wondering limited data usage - as low as 500MB a month - offered at higher speeds is in any way representative of modern users, when every available trend points to users moving away from traditional voice calls and SMS messaging towards data-based communications and apps.

EE’s assertions seem at worst, disingenuous; at best, out of touch with how people now use their smart, connected devices.

“Our new plans have been developed to offer our customers everything they have been asking for,” said Swantee in a press release. “Superfast performance, choice and value.” EE seeks to add some of that all-important value through “expert support” for its customers, and through “exciting new services”, such as EE Film (a movie store, which also offers the 2-for-1 cinema tickets popularised by EE’s own Orange Wednesdays offer) and higher-tier customers being offered inclusive add-ons such as access to a game service with two free downloads each month.

But while some of these add-ons are nice, it’s questionable how much real value is added by offering a movie store that duplicates all the similar stores already out there, along with other me-too services such as EE’s ‘Clone Phone’, which backs up contacts, photos and appointments to the cloud, along with a find-my-phone feature. Customers might well have appreciated lower monthly tariffs and reduced upfront handset charges, instead of inclusive add-ons that are already offered elsewhere through most smartphone operating systems and app stores, and which consequently add little genuine value to justify the steep launch pricing of these tariffs.

EE will surely be relying on two things as it starts to sell these tariffs to consumers: first, the ignorance of its potential customer base, who will be presented with marketing that carefully overlooks how poorly these price plans compare with those offered by the same company at 3G speeds; and second, the fact that there is simply no point of reference for 4G services in the UK at this stage, effectively giving EE licence to set pricing with impunity.

Other major network operators in the UK have expressed utter fury at Ofcom’s decision to permit EE to offer 4G services long before its rivals even have an opportunity to bid for their licences. While much of the anger of EE’s competitors is obviously self-interested, there’s no ignoring the fact that the absence of competition in this emerging product category gives EE no reason to do anything but apply extravagant pricing to its 4G products while it can.

And with the magic and sparkle of novelty appeal, EE’s marketing is already presenting its 4G offering as something amazing, when a closer examination in a harsher light exposes it as little more than a cynical effort to squeeze early adopters and impressionable consumers before competition finally arrives next year to drive prices down to a more realistic and sensible level.

There will, of course, be those who buy EE’s 4G products because they want to be the first, others because they believe that they have a genuine need for the greater speeds. But for many consumers, I fear, this launch will offer little that appeals, as the promise of higher speeds at insane prices is one that sceptical Brits have heard before, with 3G services that overcharged, over-promised and under-delivered for a long, long time. In the long term, EE's preemptive launch will do little to drive 4G expansion in the UK. EE is first to offer 4G services, but its pricing strategy will hinder adoption of 4G until the advent of competition corrects its pricing imprudence.

Last year, Ofcom released a report showing that the average mobile broadband speed in the UK was just 1.5Mbps; significantly, EE’s T-Mobile and Orange brands were identified as offering poorer performance – measured as slower average download speeds – than the UK’s three other leading carriers, Vodafone, O2 and Three. After a decade of working with 3G speeds, yet still placing last in the top five, this doesn’t exactly inspire confidence in EE’s nascent 4G proposition.

Commenting on the announcement of the company's 4G plans, EE's CEO told BBC News: "We really think we've priced it at the sweet spot. It's all based on months of consumer research." But in these times of tightening purse-strings, the idea of paying such a significant premium over 3G for a service that's arguably more limited, and which demands a higher price for identical hardware for no obvious reason, seems less than sweet to me.

Something tells me I won't be the only one for whom this announcement leaves a bitter taste.


Pricing information via TechCrunch and The Verge

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40 Comments

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As a Brit now living in Canada, those prices look decent to be honest.

I was lucky to get a promo deal from Bell here in Ontario. For $68 a month (42 pounds) I get 200 "local" minutes (in other words only to my area code) otherwise 45c/min, unlimited texts and 6GB data. I don't get caller display or voicemail for the above price. It's an extra $12/month.

So 41 quid seems not too bad. The phones are also cheaper too.

The real kicker here for me is that if you use up your allowance you're expected to pay for more or be without data for the rest of the month. At least on my (£10 cheaper for 250MB more data, 18 month) T-Mobile plan, if I go over my allowance I can still access most sites, they just block the more data-heavy stuff like YouTube.

As with most people here, I would rather have unlimited data than faster speeds and a cap - the same is true for my home broadband and wouldn't be any different here. The fact that the monthly allowances are so low is incredibly backwards if you ask me.
I could understand if the monthly caps were in the tens of gigabytes, after all many people will be looking to LTE to replace their fixed broadband, but 500Mb at that price is ridiculous - if we assume 40Mbit speeds, which is actually still technically 3G territory but IRL speed tests on 4G tend to be around this, then you could wipe that cap in less than 2 minutes. If that's not a sign that the caps are ridiculous, then I don't know what is.

I'll stick with my 3G until other players are in the game and then see about upgrading to LTE. Hopefully Three will come through with unlimited data, I'd happily pay a £5 premium for the same tariff but on 4G.

Kushan said,
As with most people here, I would rather have unlimited data than faster speeds and a cap - the same is true for my home broadband and wouldn't be any different here. The fact that the monthly allowances are so low is incredibly backwards if you ask me.
I could understand if the monthly caps were in the tens of gigabytes, after all many people will be looking to LTE to replace their fixed broadband, but 500Mb at that price is ridiculous - if we assume 40Mbit speeds, which is actually still technically 3G territory but IRL speed tests on 4G tend to be around this, then you could wipe that cap in less than 2 minutes. If that's not a sign that the caps are ridiculous, then I don't know what is.

I'll stick with my 3G until other players are in the game and then see about upgrading to LTE. Hopefully Three will come through with unlimited data, I'd happily pay a £5 premium for the same tariff but on 4G.

It's likely a sign that the backhaul isn't there to support it. The issue is that it'll be rolled out in the densely populated cities so if it was a free for all with regards to data the whole thing would likely grind to a halt and end up being slower anyway. Caps will be a reality moving forward (like they are in other LTE countries). It's up to you to determine how much you use and if the price is fair. I tend to come in about 1.5GB or less each month. I have 6GB allowance which seems more than enough for what I do. I'm in Canada though with Bell and they don't charge differently for 3G or LTE. It's the same cost.

It's not like EE pulled a Verizon and FORCED you to sign up for these new plans, right? You might as well stick with what you have now and switch over when prices are more reasonable.

On the other hand, here in America, if you were on Verizon, considered the "good" carrier by coverage, and you wanted a new phone, you were forced to switch to a plan that was capped and probably cost you more money if you were single.

I agree that the prices are high but IMO Orange's prices have always been high and their data caps have always been ridiculously low. It would have made sense to compare EE's prices to Orange's as well as T-Mobile's to provide a more accurate picture.

jakem1 said,
I agree that the prices are high but IMO Orange's prices have always been high and their data caps have always been ridiculously low. It would have made sense to compare EE's prices to Orange's as well as T-Mobile's to provide a more accurate picture.

Given EE are the amalgamation of those 2 companies and EE are the only 4G provider there's nothing to compare their pricing to.

It's thanks to the merger between T-Mobile and Orange that their caps are as dismal as they are: they reduced the caps for new T-Mobile customers to match Orange's. They also tried grandfathering in existing customers to reduce the cap by 87% which prompted a massive backlash. It was because of that, plus their crappy provision in Central London and charging me for HSDPA service when they hadn't enabled it on my account (they kept blaming my phone for not getting adequate speeds) that I jumped ship to 3.

When the other carriers get around to provisioning 4G to a decent proportion of the country (at least a year after the spectrum has been bought, so that's late 2014 at the earliest) I don't expect massive take up due to EE poisoning the well from the start with these prices.

Unlimited Wi-Fi? What does that really mean to customers? If they are saying I'm allowed to use my phone on my wireless at home then Gee Thanks
If I couldn't use Wi-Fi on my phone because the network provider said so I would be waving them goodbye pretty damn quick.
Or have I got completely the wrong end of the stick here?

Teebor said,
Unlimited Wi-Fi? What does that really mean to customers? If they are saying I'm allowed to use my phone on my wireless at home then Gee Thanks
If I couldn't use Wi-Fi on my phone because the network provider said so I would be waving them goodbye pretty damn quick.
Or have I got completely the wrong end of the stick here?

The unlimited WiFi is for roaming through BT Openzone hotspots, theres quite a few spotted about and when allowed on them and in range of one your phone would route all data through that connection saving your 4g data plan.

Does anyone know what happens when you go over your data limit? I read somewhere else that the speed is simply slowed. If its just capped at 3G speeds after you go over the limit, I can live with that.

M4x1mus said,
Does anyone know what happens when you go over your data limit? I read somewhere else that the speed is simply slowed. If its just capped at 3G speeds after you go over the limit, I can live with that.
I highly doubt that EE would simply slow to 3G - imagine all the money that they would lose due to people not be wanting to pay more because 3G speeds are fine. I would imagine they would slow down to EDGE, possibly GPRS.

M4x1mus said,
Does anyone know what happens when you go over your data limit? I read somewhere else that the speed is simply slowed. If its just capped at 3G speeds after you go over the limit, I can live with that.

As it says on the page "And if you manage to burn through your data, we'll let you know when it's running low

oufc_gav said,

As it says on the page "And if you manage to burn through your data, we'll let you know when it's running low

Yeah, I saw that but it doesn't tell me what happens when you actually do go over. This makes it sound like they may cut you off all together or start charging you but its not definitive.

Also, it doesn't say what the cost will be for further usage after you've gone over the limit. Presuming that they would just start charging you when you go over that is.

oufc_gav said,

As it says on the page "And if you manage to burn through your data, we'll let you know when it's running low


OK, not sure why it cut off the end of this.
"And if you manage to burn through your data, we'll let you know when it's running low

oufc_gav said,

OK, not sure why it cut off the end of this.
"And if you manage to burn through your data, we'll let you know when it's running low

Argh, Neowin keeps cutting the end of the line off...
"Then you can choose to buy a data add-on or stop using data until your next bill."

I have little interest in 4G speeds right now. My only concern is if getting one of these overpriced plans is the only way to get a Nokia Lumia 920!

mdtaUK said,
I have little interest in 4G speeds right now. My only concern is if getting one of these overpriced plans is the only way to get a Nokia Lumia 920!

You can always buy handsets unlocked in the UK, just look for the 920 on Amazon when it launches.

ok so I agree the prices are high and more data should be offered. BUT, and this is a BIG BUT, if EE were to not exist then there would simply be no option right now and we would all HAVE to wait for the auctions and other providers. No one is forcing a 4G upgrade on anyone, its there as a 100% choice if you want to pay a premium now. If not wait for the other providers along with the competition that will bring (read reduced rates).

Overall, having an option is a good thing.

i read on slashdot or somewhere that these plans are actually unlimited but the speeds are throttled once you hit your download limit. Not sure if it is true or not, maybe neowin could contact EE to find out.

These prices are crazy, only rich people or show-off's would use 4g right now. 3G is enough speed for me for the foreseeable future.

Good for everyone who absolutely needs the speed update, lives in a covered area and never leaves it, and doesn't have any wifi access. Which is around 0.0001% of the people. They'll be rolling in cash, I tells ya.

Just wait for the horror stories to roll in about overages

The caps are a joke. Hope this doesn't happen in The Netherlands! (no idea if LTE is here yet lol)

Neobond said,
Just wait for the horror stories to roll in about overages

The caps are a joke. Hope this doesn't happen in The Netherlands! (no idea if LTE is here yet lol)


500MB and 1GB are stupid for 4G, you could go over the 500MB limit in 10 minutes. I hope hope for EE but limited coverage, stupid prices and stupid caps will make me wait for alternatives.

Bearing in mind that the contracts offer unlimited texts and unlimited calls I didn't think they were too horrendous.. but clearly there is an element of being able to set whatever prices they want as they're the only carrier with 4G. And this, kids, is why a monopoly is bad

Chicane-UK said,
Bearing in mind that the contracts offer unlimited texts and unlimited calls I didn't think they were too horrendous.. but clearly there is an element of being able to set whatever prices they want as they're the only carrier with 4G. And this, kids, is why a monopoly is bad

I'd rather have unlimited data than unlimited calls or texts. I think I send roughly at most 100 texts a month and am probably on my phone less than 5 minutes a month but I'm always using the data, for downloading apps, steaming music etc.

Absolute rip-off. OFCOM should be ashamed of themselves. Absolutely disgusting that my taxes have paid for this spineless Government department.

jamieakers said,
Absolute rip-off. OFCOM should be ashamed of themselves. Absolutely disgusting that my taxes have paid for this spineless Government department.
I completely agree with you, but did we really expect it to be any lower? We all hoped but whilst they've got no one to compete with they can do whatever they want and people will still pay regardless (maybe not in the quantity that they are hoping for) so in the end is it them that "win". Even when other operators get their spectrums next year I can't see there being a tariff under £30 a month. It's a shame and this is why we're always behind on technologies like this.

jamieakers said,
Absolute rip-off. OFCOM should be ashamed of themselves. Absolutely disgusting that my taxes have paid for this spineless Government department.

Wait... what? Why should OFCOM be ashamed? They're not the ones who set the price, they just let EE use some of their current 3G spectrum for 4G. Something they would have let all of the operators do if they had come up with a plan instead of just waiting for the auction to go ahead.

Though I do agree, the prices are horrendous.

M4x1mus said,

Wait... what? Why should OFCOM be ashamed? They're not the ones who set the price, they just let EE use some of their current 3G spectrum for 4G. Something they would have let all of the operators do if they had come up with a plan instead of just waiting for the auction to go ahead.

Though I do agree, the prices are horrendous.

OFCOM should be ashamed because they let EE use their current 3G spectrum for 4G. It isn't a level playing field because none of their competitors have space for it. OFCOM are supposed to act in the interests of the consumer, not pave the way for monopolies like this !!

M4x1mus said,

Wait... what? Why should OFCOM be ashamed? They're not the ones who set the price, they just let EE use some of their current 3G spectrum for 4G. Something they would have let all of the operators do if they had come up with a plan instead of just waiting for the auction to go ahead.

Though I do agree, the prices are horrendous.


OFCOM allowed this to happen, thats why they should be ashamed and yes I agree they should have allowed all of them to do it so we could get some active competition instead of this monopoly

jamieakers said,
Absolute rip-off. OFCOM should be ashamed of themselves. Absolutely disgusting that my taxes have paid for this spineless Government department.

OFCOM isn't a government department (it's an independent authority) and it's not responsible for the prices that companies charge.

jamieakers said,

OFCOM should be ashamed because they let EE use their current 3G spectrum for 4G. It isn't a level playing field because none of their competitors have space for it. OFCOM are supposed to act in the interests of the consumer, not pave the way for monopolies like this !!

Its not a monopoly, yes they have 4G first by using some spare 3G spectrum (the others simply didn't have any spare, all used up for live 3g). All this does is give some people that really want it early a way of getting it early, no on is forcing you to use it or change to EE. You are absolutely free to wait for the auctions and more providers and at that time prices will come down through competition, but if you want to gain the speed boost now you can.

It is only a good thing really, its an option where there would be none - without this nobody would have a 4G option and would all have to wait, you still can if you want.

jamieakers said,

OFCOM should be ashamed because they let EE use their current 3G spectrum for 4G. It isn't a level playing field because none of their competitors have space for it. OFCOM are supposed to act in the interests of the consumer, not pave the way for monopolies like this !!

Both O2 and Vodaphone have 1800mhz spectrum... Don't know what you're talking about.

duddit2 said,

Its not a monopoly, yes they have 4G first by using some spare 3G spectrum (the others simply didn't have any spare, all used up for live 3g). All this does is give some people that really want it early a way of getting it early, no on is forcing you to use it or change to EE. You are absolutely free to wait for the auctions and more providers and at that time prices will come down through competition, but if you want to gain the speed boost now you can.

It is only a good thing really, its an option where there would be none - without this nobody would have a 4G option and would all have to wait, you still can if you want.

OK Technically it is a monopoly as no one else is offering this service, but at the same time its not through underhanded tactics or abuse of business. They had spare 3G spectrum that they have already paid for but not put into use, so they were allowed to use it for 4G. This had a few factors going into it, but mainly it was because of the huge delays and companies sitting on their arses and happy with 3G - milking it. Allowing EE to use what they already had has lit a fire under the industries arse to get a damn move on.

M4x1mus said,

Both O2 and Vodaphone have 1800mhz spectrum... Don't know what you're talking about.

They had to ask OFCOM for permission to do it, they couldn't just roll ahead with 4G even if the spectrum was totally unused as OFCOM has a say in what the spectrum will ultimately be for. This comes after years of delays with the "4G Auction" of other spectrum, although that can be put down to the other carriers all acting like children over it. On the one hand, OFCOM should never have allowed EE to set up 4G so quickly but on the other hand this mess was created by the bickering over the 4G auction (as soon as EE got the greenlight, every other provider suddenly agreed to expedite the auction).