4G – EE contract now or wait for the competition?

SET THE DATE

Regardless of who wins which frequencies following the spectrum auction, OFCOM likely won’t make any announcements until March at the earliest. EEC rules state that the entire spectrum must be available by 2014, and depending on how quickly the frequency bands are checked for conflicts – it could be a while before we see another 4G service launched to compete with EE. Assuming everything goes ahead smoothly, you should avoid upgrading your existing mobile phone contract before June.

PROVIDERS MEAN PRICES

Given the setup costs, OFCOM auction fees and time spent setting up 4G networks, we don’t expect prices to start tumbling as soon as EE faces a little competition. In all likelihood, other networks will try to price match EE but compete with more generous bandwidth caps. After all, EE seems fairly confident in its high pricing – Chief Marketing Officer Pippa Dunn defended the seemingly expensive tariffs, saying ” I think we’ve got the most competitive pricing anywhere in the world in terms of what we’re doing with our 4G pricing” and that the company has “priced this in such a way that we get the maximum uptake of consumers.”

However, this thinking is based on the idea that people won’t use their phones any more than they do right now. With faster connections, there’s every chance they will start streaming TV, downloading files and other tasks normally reserved for their home broadband connections, putting a strain on the network and quickly reaching their bandwidth caps. With unlimited calls and texts now the norm for many mobile contracts, data caps are one of the few areas left for network providers to differentiate themselves, so it’s unlikely we’ll be seeing unlimited 4G plans unveiled when the other networks launch their services. If we do, they will hold a significant price premium, as you would theoretically be able to tether other device to your phone and forego a home broadband connection – and home phone line – entirely.

Also don’t expect 4G services to replace 3G contracts any time soon. They will command a price premium, partly to recoup the costs of setting up and additional network and partly to dissuade customers from abandoning their existing contract, overloading the new system with unexpected demand. The two will almost certainly live side by side for several years, until the networks can cope with the demands of millions of users, all keen to put their “super-fast” phones through their paces.

So we await the results of the auction with great interest, and will update you with more information as soon as it becomes available.