LTE pricing can only go one way - down
EE CEO Olaf Swantee recently justified the price premium the UK operator is charging for LTE by saying that the pricing is based on a number of "principles." Quite what these principles are is not obviously clear, apart from the speed advantage over 3G and the fact that EE is the only UK operator providing LTE services today.
Perhaps this is more than enough, and I would guess Swantee will milk this advantage to the maximum. However, EE only has months before the likes of Vodafone and Telefónica's O2 UK gain LTE spectrum licences, after shelling out heavily in the ongoing auction, and rush out their LTE tariffs.
These new entrants will presumably undercut EE, and 3 UK has already stated that it will not impose a premium for LTE. However, charging a premium or even matching the price of 3G could be a struggle, if we believe a recent study from ABI Research.
The firm claims that, comparing mobile data pricing between the second and fourth quarters of 2012, 73 per cent of countries where LTE is available have seen a significant reduction in tariffs.
Measured on a "dollar per gigabyte basis," ABI said LTE tariffs fell by 30 per cent over this period. To clarify the twists that LTE tariffs can take, most U.S. LTE operators kept their charges the same but increased data allotments, while in Australia, Sweden, Japan and elsewhere operators lowered their fees but kept data quotas unchanged. Analysts are already worried that European operators won't be able to charge much of a premium for LTE.
Of particular note, Telenor in Norway launched LTE tariffs that were cheaper than its existing 3G service--a strange decision, albeit that LTE can handle much more data due to being more spectrally efficient.
While Vodafone UK has yet to launch LTE as it awaits the outcome of the spectrum auction, CEO Vittorio Colao said that most users won't notice the difference between LTE and the speeds on offer from HSPA+.
Now this might be little more than price positioning for when it launches LTE, but Colao further derided EE's reported success by claiming that he hadn't heard anyone asking for LTE, and suggested that the technology was of greater appeal to geeks.
This is yet another somewhat strange viewpoint on this much lauded technology, but possibly it is being aimed exclusively at the UK market.
The LTE network Vodafone continues to deploy in Germany is said to be following in the footsteps adopted with 3G, being hugely over-engineered.
If correct, surely Germany can't be that populated by technology geeks?--Paul