EE's 4G pricing: Fast data for those with money to burn
EE's long-trailed 4G LTE service is now open for business. Despite the fact that it's not quite up and running yet (it's due to be switched on for customers on 30 October), pricing for the service is now out, averaging around £5 more than the equivalent 3G contract.
Given the traditional early adopter 'tax' evident in almost all areas of technology, I was never expecting the UK's first 4G network to be cheap. But nor was I expecting EE to exploit its first-to-market advantage quite as blatantly as it is.
For consumers, £36 (every month for two years) gets just 500MB of data on EE's cheapest 4G option. That doesn't sound too outrageous, but I'm totally baffled by the suggestion that someone exists who wants 4G connectivity and is willing to pay a premium for it, but will use it so little that 500MB will last a month.
Just a few weeks ago, I had a chance to test the LTE service. Speed wise, I saw fluctuations between around 6Mbps and 45Mbps. However, EE said it will limit the service to around 12Mbps to provide a dependable, but high-speed, connection on a contended network.
So let's assume it's limited to 12Mbps, and that people sign up for the 500MB option, as they presumably will. In theory, they could use their entire month's data allowance in less than one minute. Unlikely, but possible.
Madness
Clearly a 500MB cap on a 4G connection is madness. To be fair, EE told me on Tuesday that the limits were worked out by looking at the data usage across the Orange and T-Mobile networks, where it found an average of 400MB and 1GB per customer respectively.
These figures make the 500MB package a strange level to set a cap at, in my opinion, as the operator presumably expects people to use more data on 4G. This bottom level is there to entice customers to the service.
"Data use may increase with 4G given its faster speeds, which is why we've designed our plans to meet the data needs of a broad range of customer types — there is a plan for everyone," an EE spokeswoman said.
"For customers who want to download multiple songs or stream videos every day, we'd recommend... any available Wi-Fi services" - EE
"For customers who want to download multiple songs or stream videos every day, we'd recommend they go for one our plans with a higher data limit or use our free BT Wi-Fi or any available Wi-Fi services," she added.
If you do plan on watching the odd video on the way into the office, or using Spotify on your phone, it makes more sense to get a higher data package, if only to avoid having to buy a data add-on every month. However, this increases the monthly price to £41 for 1GB, or £46 if you want 3GB. The maximum package provides 8GB for £56. (EE did say that across T-Mobile and Orange, only its top 10 percent of users burn through 6GB of data or more each month.)
For most people, £50 or so a month for a mobile contract is quite a lot of money. Even if you go for the second-place 1GB package, you'd pay £984 across the 24 months — a hefty whack for a phone.
One thing I am pleased to see with EE's 4G pricing is the adoption of warnings when you're approaching your data limit. I also like the ability to buy boosters to add more data, rather than it reverting to pay-as-you-go pricing.
Only game in town
Of course, EE has a head start on its rivals in 4G services; in the best case, it will be May 2013 before another operator can start up its network. The former Everything Everywhere is the only game in town for customers who want to enjoy the benefits of high-speed connectivity on their mobile device.
When the other networks do launch, I'd hope pressure from the likes of Three, Vodafone and O2 will force the price for 4G services down. The opposite could happen: if the market responds well to £45-plus per month, then why would an operator want to be the one to drive the price down for the consumer?
Or let's imagine EE sees a low take-up for 4G — would prices drop then, to try to get more on board? Perhaps, but the operators do need to pay for their network build-out and other costs.
The obvious gap in EE's price plans is the lack of an unlimited data option. But judging by the cost of an 8GB-per-month package, I fear I'd baulk at the bottom line anyway.
EE is providing the equivalent of 'introductory' pricing with its 500MB-level tariff. Is this realistic? I'd argue that 1GB is the average now on 3G, and 3GB will very quickly become the norm. Once we get to that point, EE's customers will be midway through a two-year contract, meaning they'll be left with the option of renegotiating or cutting back on their data usage — which somewhat defeats the whole idea of 4G.