Competition set to reshape European LTE
Although many of the early commercial LTE deployments took place in Europe, the region lags North America and the Asia Pacific in terms of the uptake of 4G services.
This is, in part, due to the different motivations of operators launching in the region, and also derives from the pricing and packaging strategies for LTE services adopted across Europe. To date, European monthly pricing for 4G services has been set at a premium over existing 3G services. This contrasts to pricing strategies in the other two regions where service providers are largely pricing 4G services on par or below existing 3G services.
In the latter case, service providers are focused on shifting users off their 3G networks to offload capacity to their new 4G networks and thereby reduce 3G congestion. In contrast, in Europe service providers face a less urgent need to shift their 3G users to 4G, and pricing of 4G services has been more influenced by competitive forces. Hence, pricing adjustments are evident in nations in Europe as multiple operators enter national LTE markets and this competition is driving early LTE implementers to respond.
There are obviously exceptions to this norm in the region where, for example, German operators T-Mobile and O2 Telefonica are targeting 4G as an alternative to fixed broadband for rural users and are pricing their rural and urban 4G service plans differently. There are also some pricing ‘innovators’ in the region including operators in Poland and Kyrgyzstan that are experimenting with time of day pricing and offering short term usage plans.
European service providers usually offer common download and upload speeds across different service plans, and they are not experimenting with differentiation based on different speeds attached with different data allowances, as are some operators in Asia Pacific and North America. This setting of common speeds across 4G plans is explained, in part, by the already relatively high service download speeds that are advertised in Europe.
However, again there are exceptions with EMT in Estonia and InterDnestrcom in Transnistria - a breakaway republic within Moldova - both offering speed and data differentiated service plans.
Higher data rates and allowances
European service providers generally advertise higher service speeds relative to those on offer in North America and Asia. Quoting download speeds in the 80-Mbps to 100-Mbps range is common. While a handful of operators in Asia and North America advertise download speeds on par with Europe, they also generally specify far lower average expected speed rates, [though these are] arguably more realistic in terms of the actual experience that users should expect and indeed will encounter.
European operators are offering larger data/GB allowances relative their North American and Asian counterparts. In Europe, data capped services across the 20-GB to 50-GB ranges are common, compared with data caps that are generally sub 20-GB and typically between 1-GB to 5-GB in the other two regions. Thus, despite ‘higher’ prices for 4G services in Europe, this premium is partly offset by the high data allowances that many service providers are offering in the region.
While European service providers are following the global trend of tiered 4G plans with different prices associated with different data allowances, a number still retain unlimited plans that are often subject to fair use policies. Service providers that are offering unlimited data plans in the region include Hutchison’s 3 in Austria, EMT in Estonia, DNA in Finland, Latvia’s LMT, Viva-Cell MTS in Armenia, Azercell in Azerbaijan, Portugal Telecom, Vodafone and Optimus in Portugal, and Ziggo in the Netherlands.
Europe’s carriers have been slower to launch handset based plans that are being eagerly embraced in North America and Asia. On the other hand, like Asia and North America, 4G device subsidization activity is evidently associated with contract terms - devices are more heavily discounted or provided for ‘free’ [depending on] the contract term.
While a number of operators in Europe are waiting for the allocation of new spectrum for LTE, notably in the 800-MHz and 2600-MHz ranges, many are now using or deploying re-farmed spectrum at 1800-MHz for 4G. This is notably the case in Eastern Europe where commercial LTE networks using 1800-MHz have been launched in nations including Poland, Lithuania, Latvia, Hungary and Croatia.
The European flavor of LTE shows some key distinctions relative to service plans and the positioning of 4G by operators in North America and Asia Pacific.
With a multitude of new LTE launches planned in the remainder of 2012 and into early 2013 - including growing MVNO interest in 4G - competition is set to reshape the European LTE landscape. While European service providers generally report modest subscriber counts and growth rates, and often report no subscriber numbers at all, service uptake is also expected to be spurred as new competitive dynamics and more service provider experimentation with pricing, packaging and marketing emerges. The recent introduction of more smartphone and tablet plans will also clearly promote market development in the region.