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EE ups the 4G ante with speed gains

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Less than six months after it launched the UK's first 4G mobile service, EE announced today that it intends to double the speed and capacity of its 4G network from this summer. At present, the average download rate of EE's 4G service is around 10Mbit/s. By doubling the amount of spectrum in which its 4G is deployed, EE will increase the average download rate to around 20Mbit/s in 10 UK cities, starting with Cardiff.

Although EE still has the UK's 4G market all to itself, today's announcement seems squarely aimed at anticipating the entry of competitors. So far, EE has focused its 4G marketing on a simple message: the UK's fastest mobile data service. This is a straightforward claim to make while EE remains the only provider of 4G.

By doubling its download speed, it seems that EE hopes to continue making the same claim after other 4G providers have entered the market, believes John Delaney, Research Director, Consumer Mobile – IDC. EE claims that the only other operator with enough spectrum to match its increase in 4G speed is Vodafone – and that Vodafone would have to do it in the 2.6GHz band, which would require more base stations and therefore cost more money than EE's deployment in the 1.8GHz band.

“Thanks to its headstart, EE is likely to be able to differentiate on 4G coverage too, for quite some time: by this summer, it says that population coverage will be up to 55%,” says Delaney. “EE also alluded in its announcements to further 4G enhancements, including LTE Advanced and Voice over LTE, although no timeframe was given.

“So far, UK customers have not seen that benefit in the case of 4G – because, of course, there has been no 4G competition yet. Having established 4G at a premium price point (approximately £5 per month), EE is keen to sustain that premium. Today's announcement gives a clear indication that when 4G competition does come to the UK, EE intends to try and tackle it by improving its service rather than by reducing its prices.”

But that will depend upon strong mass-market demand for the fastest mobile data available. Like most other operators around the world, EE has been cagey about the number of 4G subscribers it has, but today it gave some indication of uptake by announcing that the 4G subscriber base is currently growing by 10% per week, and that it is targeting 1 million subscribers by Christmas 2013. That suggests a current 4G subscriber base in the low hundreds of thousands, a level of uptake that indicates reservations in the mass market about paying £5 extra per month for faster mobile data. When competitors enter the 4G market, one of them is likely to test the effect of a lower price premium. If the results of such a test prove positive, EE will feel some pressure to follow suit, despite its preference to compete on quality, rather than on price.
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