Sweden now most competitive LTE market
Telenor and Tele2 launched LTE services in Sweden, almost a year after Telia. This means that Sweden, after becoming the first country in the world with commercial LTE services late last year, is now the most competitive LTE market, with three operators.
The only wireless operator that remains outside the Swedish LTE market and is betting on HSPA+ despite having secured LTE spectrum is 3. Another interesting aspect of the Swedish LTE market is the fact that Telenor and Tele2 are using the same network to deliver their LTE services.
They created a joint venture, Net4Mobility, to deploy their LTE radio access network and handle operations; Net4Mobility selected Huawei as sole supplier. Service differentiation between the two operators could be a challenge with this strategy, but pricing and marketing can still be key differentiators between the partners.
In late 2009, TeliaSonera was the first operator in the world to launch commercial LTE services in Stockholm in Sweden (and in Oslo, Norway).
The time has now come for increased competition, with three operators in Sweden now offering LTE services as their 4G weapon of choice. This is currently a unique situation worldwide, at least in developed economies. Uzbekistan is reported to have two competing LTE services available. The US and Germany should be the next developed countries to have LTE competition among several providers.
Introducing LTE services almost a year after the incumbent, Tele2 and Telenor could have been at a major disadvantage. However, Telia’s early LTE offering was more like a large commercial pilot than a full launch.
The LTE ecosystem was in its infancy, and the few devices that were available suffered from limited capabilities. Telia had to wait April 2010 to introduce a multimode HSPA/LTE USB modem. Since then the LTE ecosystem has matured, and Tele2 and Telenor are taking advantage of this evolution. From day one they are offering a multimode GSM/UMTS/LTE USB dongle, the Huawei E398.
In terms of coverage, Tele2 and Telenor must try to quickly catch up with Telia, which currently offers LTE in 12 cities. At launch, the new LTE service was available in four cities (Stockholm, Gothenburg, Malmo, and Karlskrona) with plans to cover 99% of the Swedish population by year-end 2012.
To achieve this objective in a cost-optimized manner, Tele2 and Telenor created Net4Mobility, a joint venture in charge of their LTE operations. Net4Mobility selected Huawei as its sole supplier and certainly benefited from the Chinese vendor’s aggressive pricing policy to further reduce the cost.
With several players now in the game, it is no surprise to see price competition appearing. Because all of the operators market the same technology as being 4G, they all highlight the same technical benefits in terms of speed and latency.
Alongside coverage/availability, end users pay a lot of attention to devices and pricing to select their service providers. So far the rivals cannot differentiate via devices, as they all only offer multimode USB dongles, so users are naturally focusing on price to make their choice.
Tele2 appears to have the cheapest offering, but users may consider the download limit a real brake on value. This shows that service differentiation is possible even between operators using the same network and offering the same device. Of course, other criteria such as service quality should also be taken into account, but this is more complex for end users to measure.
Globally, this first instance of LTE price competition highlights what we have stated in the past: Mobile operators’ LTE strategies should be more focused on cost efficiencies than revenue generation. The intensely competitive and price-focused nature of mobile markets will not change for LTE.