Three set to cause more disruption with 5G pricing plans

EE is finding out first is not always best as Three is set to join Vodafone is offering more attractive 5G data tariffs.

When EE first launched its 5G tariffs earlier this year, it was as everyone would have expected; the MNO charged a premium, and a lofty one at that, the 5G connectivity. Vodafone undermined this position with an innovative approach, tiering on speeds not data allocations, and now Three will go one step further offering access to 5G connectivity at no extra cost to a customer’s 4G connectivity plan.

All new and existing customers will have access to 5G with no speed caps and at no extra cost on all contract, SIM only and PAYG mobile plans. There will be data caps if you have currently have a cap on your 4G plan, however SIM-only unlimited data plans start at £20 per month.

“The forthcoming months are going to be game-changing and with our unrestricted plans, we are looking forward to unleashing the full potential of 5G to all,” said Three CEO Dave Dyson.

The approach is a sensible one from Three and leans on the strategy put forward by T-Mobile in the US. 5G is currently seen as somewhat of a bonus for customers right now, due to the limited geographical coverage of the airwaves. Offering 5G connectivity for free will certainly attract some customers, who will just have to worry about getting a 5G compatible device.

“Three’s hand was likely forced to some extent by Vodafone’s initial disruptive and unexpected pricing strategy for 5G,” said Kester Mann of CCS Insight. “But its enviable spectrum holding places it in a commanding position to undercut any rival.

“More than for any other UK operator, 5G is crucial to Three. It represents an opportunity to reinvigorate the brand, overcome a negative network perception, achieve the scale it as long-for craved and push into other segments such as convergence and enterprise.”

This is where Three will have to be careful. With more of society migrating to digital, consumers will come to expect a more resilient and consistent experience from connectivity providers. This is where Three has fallen down in recent years.

In the latest Opensignal report, Three was battling it own for last place with O2 in the majority of the categories. It had the lowest availability scores, poorest for video experience, second-slowest on speeds and worst for latency. This will not be good enough in the 5G era and if this trend continues, it would not be surprising to see Three lose market share.

Three might have been able to disrupt the market on price during the 4G era, but that will not be enough to mount a serious challenge to market share in the 5G era. Consumer expectations will shift across to availability and experience soon enough. Three has an opportunity to make a genuine impact on the status quo, but it needs to kill off the perception (which has often translated to reality) that it has the worst network in the UK.

The stars do seem to be aligning for Three. Pricing looks to be right, it has the best spectrum out of the four MNOs, the UK Broadband acquisition has set it on the convergence path and its traditional customers are perfect for the 5G era. If it can create a network which competes with the best in the UK, the next couple of years might be a very interesting quest for Dyson and his cronies.

UK consumers are not convinced by zero rating gimmicks

The telcos want us to spend more money with them, that is a given, but it appears the latest move to bribe consumers with zero rating offers is not working in the UK.

It’s been a slow creeping trend over the last couple of years, but the telcos are making less money. Whether it was the increasing irrelevance of voice minutes, or erosion of generated-cash through SMS, the data frenzy has been killing profits. It’s a cruel irony that the OTTs are using the very networks which the telcos have spent billions on to destroy the profit margin, but it is one which the industry has come to accept.

Monetizing data tariffs, and encouraging users to scale up to more expensive unlimited plans, was one way these trends could have been reversed. But according to new data from uSwitch, users are not convinced by new data plans that offer unlimited use of certain apps, favouring cheaper deals as opposed to the unlimited options.

“While these packages will be spot on for a large number of a mobile users – in particular younger users – they can feel a little restrictive,” said Ernest Doku of uSwitch. “For the older demographic that might not necessarily want to stream content on-the-go or who don’t use messenger apps, there will likely be little in this new provider battleground that stands out.”

Only 19% would switch to a contract with unlimited data usage on certain apps, with this number dropping to 11% for over-55s. 18-34 year olds were more receptive to the idea, with 26% open to changing providers. As 79% of adults now use on-demand services such as Netflix or BBC iPlayer, the telcos are making a fair assumption that these unlimited data tariffs would be appealing, but it does show sometimes statistics do not back up what was promised.

Mobile operators are increasingly turning to perks, such as free subscriptions or zero-rating offers, to attract new users, but it seems the UK are focused on the basics. 61% of the respondents to the research would change for a cheaper deal, 30% would change for better coverage and 23% would change for more flexible deals.

The last reason is an interesting one, and perhaps an encouraging statistic for Vodafone and Three. Both have launched more flexible, month-by-month plans (VOXI for Vodafone and Smarty for Three), which target more cash-conscious consumers.

That said, the statistics do also indicate one thing; to be a good mobile provider, you have to have a network which performs consistently well, and offer services at a good price.

This is a welcomed discovery for Telecoms.com, as it indicates the users of the UK cannot necessarily be bought off with gimmicks and advertising. The user is focused not on the short-term benefit of a free-service, but more of the performance of the telco, which will arguably have a greater impact on the users life.

But the smoke and mirrors should not be seen as a surprise. Why are telcos focusing on gimmicks and the cheesy endorsements of past-it celebrities, which make the brand look cheap and unappealing? Because you don’t have to spend as much on a second-rate celebrity as you do on making sure your network is up to scratch.

Perhaps this is another indication the telcos are shying away from actually investing for the long-term? Maybe it shows us the management team are more interested in short-term pleasures than longevity and sustainability? Or it might just say that the telcos don’t care about customer experience, just as long as they pay up once a month?