back to article Why is 4G so expensive? Answer: The Post-Voice Era is coming

EE, the UK's largest mobile operator, makes most of its money from voice calls - but that's coming to an end with the launch of 4G tariffs that allow unlimited chitchat and text. Those tariffs start at £21 a month, with no handset subsidy and capped at 500MB of mobile data, but they impose no limits on texting and calls. The …

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In a few short years

The EU will investigate an impose tariff limits.

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Holmes

Re: In a few short years

I think you mean they'll begin launching the inquiry, and nothing will be done about the results until 2020. At which point a law will be passed, but then the networks will be given a further year or two to comply to it.

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Re: In a few short years

The EU only regulates on matters affect the single market and intervenes very rarely in individual countries. So, they are unlikely to regulate here but roaming charges will almost certainly be capped.

However, the implication of steadily rising prices once people have moved to 4G and have no choice to go back sounds like an interesting reworking of the initial 3G contracts. The problem was that WiFi pushed down price expectations and are likely to act as a damper again. This is probably why EE is testing the water with £5 extra charge. Other networks will probably orient their charges around that though I would have though there will still be plenty of voice only tariffs for the majority of us who can't be bothered installing additional software just to make calls.

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Re: In a few short years

"The EU only regulates on matters affect the single market and intervenes very rarely in individual countries. So, they are unlikely to regulate here but roaming charges will almost certainly be capped."

Agreed. But the tragedy of the EE/4G plans is that they are far more interested in shoving more half working solutions out the door rather than upgrading the existing assets to get the coverage, reliability and cost base to contest land lines. So I pay Virgin £45 a month for landline rental, largely unlimited UK calls, and my broadband. That's over £500 a year, admittedly for stonkingly fast broadband. If Vodafone could offer me at home the 5 Mb/s connection that I can get on decent 3.5G connections, then I'd live with that as my broadband speed, they could chuck in the free calls, I save the land line rental (already paying the mobile bill), which is around £160 a year. Voda then get £340 a year extra income.

Their 4G offer will undoubtedly be as patchy as the 3.5G offer, meaning that for most people it is additional to the landline, not in place of, and I don't think that's a compelling offer, even with 4G speeds.

All the wireless telcos are the same - they still think "mobile", when that has become incidental. If they want to make serious money, then 4G might be part of it, but competing with landline is the place to start, and that's about improving coverage and signal strength. The berks demonstrate how bad their thinking is with things like Signal Boost, where they "improve" your mobile phone reception using wired broadband. A bit like Fiat offering a free bus pass because their cars are unreliable.

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Re: In a few short years

Quite possibly, however it seems most folks are ignoring the cost of the kit required to run an LTE network. Over at least the last year or so, EE have been quietly swapping out 3G kit for kit that is 3G/4G capable from our good chums, Huawei. Is this supposed to be an overhead to be absorbed? Or should the contract price for early adopters pay for it? At launch, there's not going to be huge numbers of users with unlimited data deals swamping their network - if you happen to live in coverage then you'll get to camp on a cell with LTE, otherwise tough luck for the moment. By the time there's ubiquitous coverage, contract rates will have come down.

As is normal, early adopters pay through the nose for the privilege of looking down it at all us plebs. I'm ok with that, personally.

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Anonymous Coward

Re: In a few short years

... by which time, 5G will be on the table ;)

I see the same with the EU chasing "low-cost" airlines:

they impose some silly "fees"

EU takes 5 years to introduce a law banning the fees

next week after the ban the airlines impose new fees

EU takes another x years and hails it a success on behalf of the consumers

next week after the ban the airlines impose new fees

and the merry go round goes on and on.

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nonsence

"in a year's time they'll be launching 4G tariffs of their own and it would be a mistake to expect those prices to significantly undercut what's on offer from EE"

sorry but i disagree. Mobiles, like broadband are a race to the bottom. The big mobile companies need customers, without them the massive losses they make would cripple them. The others will drop prices, even if its just a few quid, to tempt customers to them. Its one of the few places were compitition actually works

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Re: nonsence

Well in the US they buy up as much of the spectrum as they can, eat all the other operators, and jack prices up high. Just like broadband. There has been no race to the bottom, only a race to fleece the customer as much as possible.

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Re: nonsence

Hopefully, you're right, but I fear you may not be given the state of the market.

I remember when T-mobile (ne One-2-One) launched in the UK and had a range of dirt cheap tariffs designed to force their way into a maturing market. I was on their £60-a-year, 10p-a-call / text plan for years until they finally canned it.

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At long as they don't increase the price of 3G I'll stick with that.

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FAIL

Whats the point

Unless you make masses of calls then theres no real point in changing.

Data 10 times faster ? So what you are limited to how much you can use and you won't see that big a difference on browsing.

Unlimited texts......... woo hoo, only send a dozen or so a month anyway

Cost of new phone.......Have an HTC one S not on contract with t-mobile so would need to buy a new one

Unless they do an unlimited plan at a resonable price even if FUP part of it then I will think about it but only if FUP is for say 8-5 weekdays and no restrictions evenings and weekends as a replcement for my broadband plus mobile broadband dongle.

As it stands I like most t-moile and orange customers see no reason to change as I have unlimited data and enougth minutes and texts already for just £16 a month on my Vodafone contract that included the HTC one S at no extra cost plus a second sim that my sister is useing on t-mobile which I could upgrade but for £12 gives 300 minutes, 300 texts and unlimited data.

Thats 2 unlimited data contracts plus calls and texts and a great phone for less than the basic fone included from EE....

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Boffin

I still don't understand what 4G is for!

On a phone I cannot imagine needing faster than the speed you get from a good 3G signal (what really needs more than 14Mbps on a phone?) but when used tethered, or on a powerful tablet, anything needing 4G speed is going to burn through any limits in the blink of an eye.

Sure, 300Mbps would be great, but only for about 3 and a half minutes with an 8GB cap!

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Re: I still don't understand what 4G is for!

i agree - but you have made an assumption on "good 3G signal"

I don't know if it is just down to network congestion, but it's almost impossible to get a 3G connection on Orange / T-Mobile / EE coming out of London Waterloo at about 5. When i try to make a call, i almost always fail to get a connection, despite showing full signal.

At point, the best solution i have found is to drop my N8 into 2G only mode. Then i get through right away. If 3G was reliable, then it wouldn't be a problem, but it is just infurating at the moment, and i'm sure it has got worse in the last 6 months or so.

so the question is, is it worth me going for a 4G contract as presumably the connection will be more reliable, or is it more a case of "if they cannot run a decent 3G network, why should 4G be any better?"

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Headmaster

Re: I still don't understand what 4G is for!

3G is saturated in dense urban environments and gives poor coverage in rural areas. LTE fixes both of those problems, you get more total bandwidth to share between each user in a cell and also 700/800MHz frequencies for wide area rural coverage.

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Re: I still don't understand what 4G is for!

And I think I've heard of 4G being more efficient with smaller chunks of data, 3G requires a chunk of data for small things like Instant Messaging or somesuch... crazy to think, back in the day when 3G was auctioned off, no one could think what the consumer might use it for other than to watch Match of the Day highlights.

These days, my mate's jail-broken iPhone and a genuinely unlimited Orange data plan meant he had acceptable home broadband for the two weeks it took Virgin Media to see to his new flat.

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Headmaster

Re: I still don't understand what 4G is for!

Your 3G problems are down to capacity and it is not just calls. There will be a lot bandwidth taken by data users, I'm guilty of that, I use my phone to listen to the radio (nice all I can eat data deal on my contract). It is better to switch to 2G if you just want to phone as this is under utilised, unfortunately your phone will always try to use the 3G service it that is available. Your signal will show strong it is the backhaul that will lack the capacity.

With a 4G service all the data users should be using the 4G leaving the 3G clear for voice and SMS.

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...its simple, Orange as was were thieving b*ds, and so are EE. And I speak from personal experience.

Their business model is extremely simple to both customers and competitors alike. Sell crippled tat, at applesque prices, provide zero customer support and then break their own contracts when it suits.

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Agreed

We're on Orange broadband (got it when it was freeserve) and a month or so ago we got a call from them, saying they can upgrade our broadband speed up to 17mb (we were on 4mb at the time) and lower the cost per month for orange broadband. So we agreed.

Next month our bill was £20 more than before. And our broadband speed was stuck at 7mb. So we called up, after lots of arguing with the call center staff we discovered that low and behold we weren't in an orange broadband area, hence the extra high bill, and the fact we couldn't go over 8mb. The guy agreed to give us 6 months of phone / internet for free and the parents were happy with the deal... I was not

Reported them to ofcom for miss selling. And I've advised (once again) that once the contract is over we move to Sky (only good BB provider in my area) I also pointed out that, by BSing us like this, we could get out of the contract and move to sky straight away but parents *shrugs*

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Anonymous Coward

Re: Agreed

I threatened them with court.

They laughed "with our lawyers are better than yours" (some arrogant little script monkey)

Sent in claim from court. with dates for appearnace

Got full refund, compensation and out of contract.

I'll never use them again or recommend the thieving toe rags.

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Anonymous Coward

> Orange as was were thieving b*ds

It's spelled "bastards".

A buddy of mine got a phone call from Orange offering him an early upgrade. He was pleasantly surprised and he accepted. Only it turned out to be a third party reseller and not Orange at all.

The strange thing is that this third party had all his account details. So either Orange had a massive data breach and didn't cough to it, or they had sold his details. Either case puts them into the "bastards" category.

For this and other reasons (risible data caps) I moved to T-mobile. Just before the merger was announced. FML.

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Your buddy accepted a sales call from some random stranger and got suckered.

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Maybe not, I had a call claiming to be from Orange a few days ago.

I became suspicious when they claimed I was due to come out of contract in about 45 days (no, it's about a year) and asked me to confirm my address, but gave my old address which I had corrected with Orange about a month ago.

In summary, I believe they were actually a third party, but I also believe they got my information from Orange.

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Facepalm

3g users will be stuck with orange and t-mobile unless they upgrade. Why is my 3g mobile showing EE as my network operator?

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Rob

Because...

... that's the company that now owns all the infrastructure. Orange and T-Mobile are just sub-brands now which will eventually be wound down as they move their customer base over to EE (granted it will take them a number of years).

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Holmes

I think that 4G is a great idea, high speed universal wireless data is brilliant. However at the price points they are talking about I am just not interested in it at all, if they want to get me onto a 4G connection then the handset needs to be free and the cost per month needs to be around the same as I'm paying now with the same data limits. Otherwise I have no incentive to move away from 3G.

WiFi is so easy to find/access/use and is provided for free by so many places that these 4G prices are a bit of a joke really.

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FAIL

As above I do most my 'txing' via facebook & whatssapp in pubs and clubs therefore I use their free wifi

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I'm very happy with my 3g thank you, I'll only switch over if there is no difference in price. If it's more expensive I'll just stay on the tariff I'm on at present.

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Anonymous Coward

And when outside of 4G region?

So how are things handled when, as is very likely, a EE customer on 4G drops out of the very few 4G coverage zones?

I guess the costs & freebies are the same, but speed is no. And how well do mobiles handle a change from VoIP to 3G/2G phone calls are reception changes?

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Currently they can price gouge because there is no competitor. At launch EE also has capacity issues, which means the sell it cheap, get a huge installed userbase option isn't open to them either. It's a lose/lose in my book, I'll stick with my £13 a month SIM only deal on Three that gets me unlimited data and tethering.

Me, I wish they'd all stuck with 3G until universal coverage got sorted :/

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US does cost more but most of the world doesn't

Also the US gives you a 50 state roaming deal and fixed price calls across them. It would be like having a European roaming deal that charges a flat rate.

Some of your other points are valid but for mobile phone deals the US is the wrong comparison. Canada and the US seem to have atrocious deals largely due to lack of effective competition and regulation. How do the proposed prices compare with those in France/Italy/Spain/Germany? Those are much better comparators for this type of service.

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Re: US does cost more but most of the world doesn't

I read before, and I'm not sure if its true, that when the US allocated mobile phone numbers they didn't make them significantly different to home phone numbers, with the area code etc. So then they were forced to charge similar prices for calls as they did for home phones, so all local calls were free. If it is true the extortionate data rates are probably trying to claw some of that money back

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Re: US does cost more but most of the world doesn't

Most of the rates you see are for contract rates with subsidized phones. If you go outside the loop to MVNOs, you tend to find better deals. Some of the best ones use T-Mobile USA (Simple Mobile and Walmart's Family Wireless) or Sprint (Boost Mobile and Virgin Mobile) as the base provider, and the rates provided seem much more competitive and in line with what you see abroad. It's a lot harder to catch a break with AT&T and Verizon, however (and none of the AT&T MVNOs I've seen charge any better than AT&T themselves).

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Megaphone

perhaps there will be an Apple style upgrade

for those who say I'll stick with 3g thankyou, well you are right for a phone its all you actually need.

UNTIL... the networks start cannibalizing the existing 3g spectrum for 4g signals, something they will start justifying to OFFCOM very early.

once 3g service degrades enough, the 3g-tards will be forced to 'upgrade' to the new higher priced tariffs

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WTF?

Why would I want a high bandwith mobile data connection with a 500mb or 1gb cap?

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> Why would I want a high bandwith mobile data connection with a 500mb or 1gb cap?

Because if the speed is faster, more people can squeeze into the broadcast medium, so its cheaper - more punters per second can serviced.

Hasn't anyone else noticed that you can get a good 7.5mb/s 3g link, but it can still be really slow? That's contention and faster links means better service.

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By the time the other operators get 4G, EE will have raised the acceptable price point

"By the time the other operators get 4G, EE will have raised the acceptable price point"

More likely they'll have established that people just won't pay it and won't be able to tell if its because the price is too high OR the coverage is to restricted, since either of them is a deal killer for many.

I don't think we'll know what users are really prepared to pay till the network covers a lot more than 10 cities and actual competition is likely to start well before coverage stops being an issue. Till then it's a distress purchase if the alternative is congested 3G. TBH if 3G congestion's the problem smart users should just switch to "3" for an instant boost and wait till 4G becomes widespread and cheaper.

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Re: By the time the other operators get 4G, EE will have raised the acceptable price point

Switching to Three would be leaping from a congested service to a very patchy one, with no data on 2G.

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4G is a post-voice technology

All the 4G technologies (LTE, LTE Advanced and WiMax) are pure packet-based data technologies, not circuit-based voice technologies with data as an afterthought as with GSM/GPRS/EDGE or 3G/HSPA/HSPA+. In the case of LTE, voice (VoLTE) is the afterthought that is only just beginning to be deployed.

Even if margins on voice were not collapsing, voice turnover would still fall as the West reached peak voice and call volumes are now dropping. We may soon reach the point where voice calls are socially considered unacceptably intrusive in most situations. I for one can't wait for the day I can just ditch my cell phone. The great thing about iPads (and equivalents) is that they cannot receive phone calls.

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Boffin

The Data party

The reality is that when you analyse use and traffic there is a about a 100x to 300x difference between voice and data. Voice is over priced. Data is hugely subsidised by voice on existing Mobile. This is why "3" makes little or no money (I think none ever in Ireland) as they don't have enough voice customers.

Mobile data ought to be more expensive. The mystery is why the 4G isn't x5 more expensive, unless in reality the GSM & 3G voice charges are unbelievably excessive.

50 minutes voice at less than 16kbps each way costs the operator how much compared to 1G of data (all of which is is outside their network).

Some voice calls are on their network (no data leaving)

Other Calls:

if you get as many calls as you make, then the outgoing termination costs for operator are similar to incoming Revenue.

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Re: The Data party

The expensive bit is moving the data around the mobile network. Once it reaches the public Internet the costs fall dramatically (how do you think ISPs can afford to offer unlimited ADSL for less than £25/month? It costs them pennies per gigabyte to shift it over the Internet, that's how).

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Anonymous Coward

Re: The Data party

If that's so, why is in-network mobe-to-mobe calling usually the cheapest (in most US networks it's universally free)? Probably because the data never leaves the internal network and thus doesn't have to cross networks and accrue usage charges from other networks or (if it hits the internet) the trunk provider.

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big deal

I don't really see what the big deal is, In an established mobile phone market this is just your typical first adopter tax. The same happened with HD broadcasts on Sky and Cable, BluRay discs and with the introduction of data plans on 3G. If however the prices and data packages show a significant improvement in a year or two, then you have a problem. If you want to be on the cutting edge, even if it is rather pointless at the moment, then you will have to pay the price.

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Re: big deal

In many ways it is pointless as 3G could provide the data you require but fact is too many folks have phones and the masts and infrastructure are saturated and the telcos seem to not care. Given so few will be able to early adopt because of existing contracts etc it means if you are in a covered area then for a small rise in costs you can actually get what in all likely hood will be a shit fast service as no other bugger will be on the tower which will be fibered up to the hilt.

I often work in and around London and I can say that both my Orange work phone and my personal Vodafone phone really struggle, often I cannot receive email or make a call, and the thought of a using a data intensive app like Google maps is well roulette, I am almost always getting HSPA connections but it does me little good, luckily BT Fon or wifi or whatever they call it now coupled with free wifi hotspots means I can usually muddle through without too much hassle, but it would be nice if things just worked.

I don't want 4g I just want my phone to work, if £5 tax per month is what it takes I will probably end up over there unfortunately :(

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4G pricing in Finland

I am happy to have 4G service here in Finland since even though living in a city my address can't get reliable ADSL due to old cabling. Last year ;G became available and I pay 19,99€/month for 50mbit down/25 mbit up speed + 9€ for a LTE router from Huawei with an external antenna on the roof with a 5 m cable. Real world speeds are 20-50 mbit/s up and 5-10 mbit/a download. No limits on the data. Really happy with it. Only problem is I don't get a public ip4 address.

For double the price you can get up to 100 mbit/s download speed.

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Bronze badge

The really expensive bit is putting a network there in the first place - even if nobody ever makes or receives a single call, just putting a signal out there costs a fortune. Really, it's then a question of how many people you can spread those costs over (hence new entrants rushing to pile people in) and how you can squeeze them. UK mobile companies came up with a nice scam using premium rate 07xxx numbers to rip landline customers off - nice little earner, to the extent at least two started paying customers a cut of the action for receiving calls! Even Ofcom eventually got pushed into cutting back on that though.

In the early days, calls were all they had, so they had to milk every customer hard to make ends meet. They tried it for a while with mobile data, but couldn't get enough takers (I still remember paying £50 a month for a matter of megabytes on Vodafone - and most of the time that was GPRS, too!) - so they dropped the prices a bit and got more customers.

3G (and earlier) does seem to do a lousy job of handling long-lived slow connections (like push email!) - LTE should be much better at delivering little bursts of data to lots of people. The "problem" (for telcos) is that voice is just another data stream - not only making it much harder to use it to rip customers off on outgoing calls or bundles, but making it easier for people to use non-scam numbers for their incoming calls. (You'll note this was one feature Three were careful to block when implementing and promoting Skype on their network: you can't use it for calls to/from UK landlines, that would kill the termination profits!)

I actually like the "calls+texts free" aspect - basically, calls and text are just tiny little trickles of data, to a modern network - as soon as they stop screwing people on calls from landlines, I'll be fairly happy. The overall price is much too high, of course, but that's to be expected for a brand new service I suppose; it'll probably drop a fair bit the instant another 4G network opens up.

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Stop

Orange & T-Mobile Swap

No one seems to have mentioned that for Orange and T-Mobile customers to swap to a 4G early, they have to be in the first 6 months of their contract and return their existing handset in perfect working order.

I was initially a bit tempted as the resale of the handset would have knocked a few quid off.

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Anonymous Coward

4G is actually more efficient and therefore cheaper than 3G. So it's rather silly to overprice it.

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Anonymous Coward

Err

Except that the 3G network is paid for and the 4G one isn't. Your argument is like telling someone with a 5 year old Ford Focus that they should buy a brand new Ford Ka as it's more efficient and they'll be better off. You're ignoring the capital cost.

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The Real 4G Story

Here is the real big-picture 4G story and though it has a Canadian slant, it is applicable elsewhere:

http://www.techvibes.com/blog/post-commercial-broadcast-age-2012-10-24

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