Analysts react to O2’s 4G launch news

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As EE’s nine month exclusive on 4G services nears an end, industry analysts offer their views on what impact O2 will have on the market following yesterday’s announcement

Ovum telco strategy analyst Steven Hartley:

“The UK will have LTE competition from the end of August and we expect the remaining rivals to follow up with announcements soon. However, in spite of the impending competition it should be stressed that EE has a considerable LTE coverage (and therefore addressable market) lead and a particularly strong spectrum position relative to O2.  This is readily apparent in the fact that O2’s launch includes only three cities from the outset.

“Nonetheless, O2 has proven adept in the past at attracting customers in the fiercely competitive UK market. Although details of O2’s LTE plans are lacking in today’s announcement, we like O2’s ‘30 day Happiness Guarantee’, in which dissatisfied customers can switch to a 3G plan if LTE fails to meet their needs. Getting LTE in the hands of users so that they can experience the benefits of the technology has been one of the key challenges for operators around the world and this approach allows hesitant customers to take the plunge.”

CCS Insight senior analyst operators Kester Mann:

“O2’s announcement is the lowest of low-key launches. There is only limited messaging on its website and through social media. There are few details about pricing, and the initial roll-out will extend to only three cities (London, Leeds and Bradford), compared with 11 for EE. By the time O2 launches on 29th August, EE could be very close to hitting one million 4G customers.

“However, it does give the operator the kudos of making an announcement before Vodafone, who we understand are poised to make an announcement next week. With 3 launching in Q4 and electing not to charge a premium, albeit with a network of limited coverage, the UK is set to become one of the most competitive markets for 4G services.

“O2 will face challenges in launching 4G without a supporting iPhone which will make for challenging conversations at point-of-sale, and it also needs to carefully consider its message around 4G. In addition to its strategy around Wi-Fi, it has brought a number of brands to market recently including Refresh and Tracks.

“We expect O2 and Vodafone to focus marketing on the benefits of their 800MHz holding since lower frequency signals have greater potential to penetrate further indoors. These operators picked up twice as much spectrum in this band as EE at the 4G auction in February.

uSwitch telecoms expert Ernest Doku:

“Finally EE has some competition for consumers hungry for super-fast mobile internet.

“For nine months the UK’s 4G market has been a one-horse race, but now EE has a thoroughbred breathing down its neck.

“However, until O2 announces full pricing information it remains to be seen just how hard-pressed EE will be.

“O2 is playing catch up when it comes to availability – launching to just three cities initially – so we must wait to see if EE’s lengthy head start is enough to keep its edge as the 4G market leader.

“And it’s likely there will be other teething problems for O2. Its 4G network won’t be available on the biggest phone of last month – the iPhone 5 – and its lowest-priced plan seems unlikely to be as cheap as EE’s.

“However, until we know what £26 gets you, we don’t know if O2 will bring true competition to the market.

“But any other providers in the 4G market are incredibly welcome, and O2 is just the first of a wave of other big providers set to launch the service. As more players continue to enter the market, we hope the cost of 4G will fall – particularly as our research shows that 38 per cent of Brits think it is too expensive and 69 per cent are concerned their mobile bills will rocket if they get 4G.”

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