When it comes to 4G, it's not about having the fastest network. It might not even be about having the one that reaches the most consumers.
At least, that's the view of Vodafone UK CEO Jeroen Hoencamp, who -- in a blog on his company's website -- talks up the importance of being able to provide high-quality services indoors while dramatically playing down the need for speed.
"One of the things that makes us different from others is that we have our 'low band spectrum'," he says. "What that means is that our 4G is on a lower frequency, which travels further and deeper indoors."
"We could build a network just to achieve massive speeds," he adds. "But the reality is that you don't currently need anything beyond 20 Mbit/s on a mobile device."
Hoencamp's argument is hardly surprising. As he notes, Vodafone holds plenty of sub-1GHz spectrum, which is great for indoor coverage. What he neglects to point out is that it also lacks much of the high-band stuff operators need to provide "superfast" mobile broadband services.
EE , Vodafone's chief rival, is in exactly the opposite position. By lumping together spectrum it holds in the 1800MHz and 2.6GHz bands, in a process known as carrier aggregation, it has been able to boost the connection speeds it can offer its 4G customers. Sadly, for EE customers, EE has no 900MHz and a mere smidgen of 800MHz spectrum, raising concerns about the quality of its indoor services.
Table 1: UK Operators' Spectrum Holdings
|800MHz||900MHz||1800MHz||2100MHz||2100MHz unpaired||2.6GHz||2.6GHz unpaired|
|Source: European Communications Office, operators.|
Despite Hoencamp's bluster, Vodafone would probably struggle to match EE on speed for this very reason. As a result, the operator has focused on its content deals with Sky and Spotify when marketing its 4G service.
"Our 4G entertainment packs are massively successful for the simple reason that customers don't buy 4G for the latest technology -- they switch to Vodafone 4G because there's particular content they want to access," says Hoencamp.
This seems like a risky play by Vodafone. While it's refreshing to hear an operator talk about something other than connection speeds, the video services Vodafone has been marketing cannot function satisfactorily without high-speed networks.
Vodafone might insist its networks are up to the job, but consumers could easily be lured to EE -- which has persistently bragged about its high-speed capabilities -- if they sense otherwise. After all, many 4G customers already have contracts with Sky and Spotify (or other online video and music providers) and may see limited appeal in Vodafone's offering.
Indeed, while EE has racked up a total of 7.7 million 4G customers -- more than all the other network operators combined -- Vodafone is lagging the pack with about 1.4 million. EE, of course, was able to launch 4G services well in advance of its rivals, but Telefónica UK Ltd. (O2) and Three UK have done far better than Vodafone on 4G take-up, with 3 million and 3.1 million customers respectively. One potential hindrance may be Vodafone's desire to charge a premium for 4G services, with other operators slashing fees to attract interest. (See Eurobites: Vodafone's 4G Premium Backfires.)
Where Vodafone does have the recent edge is on overall customer growth. In the July-September quarter, it reported 96,000 net additions, while EE lost 50,000 customers. Vodafone's success also extended to the more lucrative postpaid sector, where it snagged another 231,000 subscribers (losing 135,000 at its prepaid business). EE, by comparison, could only manage 119,000 net postpaid additions, registering 169,000 prepaid losses.
In his blog, Hoencamp also argued that coverage is less important than having the strongest signal. Again, this line is to be expected given that Vodafone's 4G network is currently available to about 50% of the population, while EE's reaches more than 80%. Yet even if Vodafone can boast an advantage on signal quality, it has not been able to convince consumers its 4G service is the one they should use. EE remains a long way in front, while Telefónica and 3 each have more than twice as many 4G customers, despite trailing Vodafone (albeit marginally) on coverage. Unfortunately, Hoencamp's business seems to be going wrong somewhere.
— Iain Morris, News Editor, Light Reading