Apple has finally launched the widely expected new iPhone 5, bringing a wider screen (increased to 4-inches), better processor (A6) and a thinner device than its predecessors. But one of the highlights [is] the iPhone’s supporting LTE technology.
This couldn’t come on a better time to EE (UK), which has just announced [plans] to launch its LTE network later this year. Even without an exclusivity agreement with Apple, EE will enjoy a great period of exclusivity, being the only operator in UK to be able to offer superior data speed experience for iPhone users.
I am sure everyone remembers how important the iPhone was in 2008 to drive 3G adoption by enhancing data usage, allowing a better experience with browsing and video, and starting the huge demand for mobile applications. The iPhone 5 won’t be different - it will help operators to make 4G benefits tangible to customers, helping the customer take up in this new technology.
Furthermore, the iPhone 5 is a high end device and LTE is a premium service. Customers willing to enjoy the most of the device on a LTE network will have to pay more for that. This will attract early adopters with relatively more income available for telecom services than average customers. Therefore, EE will be able to enjoy a unique position to attract most of this premium segment to its customer base.
A survey conducted by ITM in May 2012 with 1,200 smartphone users in the UK shows that Apple has significant market share in the wealthiest segments, with 44% market share in the segment between £55,000 (€68,091) and £88,000 yearly income, and 27% in the one above £88,000. In addition, 94% of current iPhone users [intend] to change their current device for another Apple one. Consequently, this indicates the potential customers that EE will be attracting by offering the iPhone 5 attached to its LTE offer.
The opportunity to make a very successful start for its new LTE network is there for EE. The question will be how the operator will meet customer expectation at this initial phase of deploying a new technology, when problems and challenges are expected to happen. That will bring more responsibility to EE’s LTE deployment strategy as this “premium customer segment” is highly demanding in terms of service quality, availability and customer experience.
Júlio Püschel is principal analyst and head of mobile operator strategy at Informa Telecoms & Media