When Vodafone announced New Zealand’s first 4G network last month, the company didn’t announce larger data caps allowing customers to make full use of faster downloads.
In the short-term this may not matter. Early adopters put up with less than ideal conditions – many see this as the price they pay to get access to new technology.
Long term it will matter. Telecom will launch a competing 4G network before the end of the year and 2degrees will no doubt follow. The could be another market entrant.
Either way, data is one area where competitors can differentiate products.
Make no mistake, data use will increase. According to numbers from this year’s Mobile World Congress mobile devices exchanged 0.9 exabytes per month in 2012. An exabyte is a billion gigabytes.
Last year more mobile data moved through the airwaves than in all human history.
Mobile data traffic is growing at a compound rate of 66%. By 2017 wireless networks will move 11.2 exabytes.
The fastest growing sector will be machine to machine (M2M) communication which is growing at a compound rate of 89%.
A report in CommsDay says New Zealand and Australia have higher than average use of smartphones when compared to non-smart phones. The numbers come from the Cisco Live conference in Melbourne.
Globally Cisco expects non-smartphones to be 50% of devices by 2017. In Australia they will be just 2.4% of the total and in New Zealand 7.4%.
New Zealand is ahead machine-to-machine connections which will hit 29% of all connections in 2017 while in Australia they will account for 28% of the total.
Cisco also said by 2017 mobile devices will consume over 5GB of data each month. That’s up from today where the average smartphone uses 342GB or 1.3GB if on an 4G or LTE network.
Are 4G networks cursed?
New Zealand’s telecommunications companies planning to bid for the 700Mhz spectrum should listen to what their South Korean counterparts have to say about 4G mobile.
Korea’s top carriers warn that although the rollout of faster mobile networks has been good for consumers, they struggle to make money.
A report in Independent.ie says:
South Korea is often held up by European governments as the model they would most like to replicate, with superfast networks enabling millions of people to shop online, communicate and become more productive.
Yet the report goes on to say competition means SK Telecom Co Ltd and KT Corp have to fight for every customer. This means heavy marketing spends, handset subsidies and continually offering more for less.
The story says 30% of the 50 million South Koreans now use fast networks and while Korean customers spend more – an extra US$13 each on average – the money doesn’t cover the huge investment poured into the 4G networks.
According to the Chorus availability map the UFB network isn’t coming to my house any time soon.
We were almost the last street in Auckland to connect to the cabinet network. We’re probably at the back of the queue for fibre.
Thanks to the New Zealand government’s short-sighted intervention over copper network regulation I’m unlikely to see much VDSL action from any of the major ISPs in the near future.
On the other hand, I expect to see a choice of 4G networks by Christmas. And if my experience with the network formerly known as XT is anything to go by, I won’t have much competition for the local tower.
It isn’t unrealistic to expect VDSL-type speeds from wireless data.
Sure that’s not as good or as reliable as a fibre link and the cost per GB of data is high. But until Chorus runs fibre past my house it is the best deal I’m going to get.
The wait for fibre could easily be six years. That’s a long time in technology. Six years ago smartphones and tablets barely existed.
Maybe when the network reaches here I’ll be gagging for fibre. Or maybe, I’ll have learnt how to live without it.
What do you think?
Vodafone NZ has stolen a march on its competitors rolling out 4G mobile to parts of Auckland earlier today.
Although coverage is limited, only 30% of Auckland gets the faster service at the time of writing, the company is getting runs on the board while rivals seem to be months away from a full launch. Vodafone plans a fast ramp-up with Christchurch getting a service in May, Wellington in August-September and a further 15 towns by year-end.
4G will give users faster data downloads and smoother experience with data heavy applications like video conferencing and gaming. On a good day and a uncrowded tower, 4G sends data at around 10 times the speed of 3G networks.
How will Vodafone make its 4G investment pay?
First the company will charge most customers an extra $10 a month on top of their existing plans. Big spending customers – those already paying $120 a month or more – won’t pay the surcharge.
The second part is more subtle. There’s no increase in monthly data allowances. Given that 4G makes it easier and quicker to shovel bits into a phone that could see customers bust their existing limits and begin paying for more data. Extra data typically costs more per unit than bundled plan data, so Vodafone has an opportunity to extract more from customers this way.
Or possibly not. Vodafone chief executive Russell Stanners told the NBR’s Chris Keall faster speeds don’t necessarily mean users will download more data. He said overseas users only get through one or two GB a month.
And the business model?
Carriers like Vodafone often treat 4G as a bigger pipe for selling mobile broadband by the gigabyte. That appears to be what’s happening here. Over time Vodafone will collect hundreds of thousands of $10 per 4G account per month and will sell bigger data plans.
There’s another opportunity that Stanners and his executives must have considered: how to boost revenues by adding paid-for applications and extra value-added services to the mix. Carriers around the world struggle with this – can Vodafone’s New Zealand operation come up with some answers?
Britain’s 4G spectrum auction raised a third less than expected. UK telecommunications companies paid £2.3 billion to snap up the extra bandwidth needed to run next generation mobile data networks, that’s £1.2 billion less than the amount penciled-in by the government.
What does this mean for New Zealand’s spectrum sale which will probably take place later this year?
Previously there’s been speculation an open auction of the 700MHz band could raise $200 million. That figure may look ambitious now.
Vodafone and Telecom NZ are both experimenting with 4G services and are likely to bid for the new spectrum. 2Degrees could also take part and smaller players have bid for spectrum in earlier auctions.
The 700Mhz band is a sweet spot for mobile broadband – at those frequencies mobile signals do a better job of reaching through buildings in densely populated areas like central business districts.
As a rule of thumb, the lower the frequency, the higher the value of spectrum to carriers.
There’s also a Māori claim for spectrum which many expect could be used by iwi as a bargaining counter to wrest back some control of 2degrees – although that is not the only course of action open to Māori.
You could argue New Zealand’s carriers paid too much for 3G spectrum in 2001, it’ll be interesting to see how they act this time. While no-one wants to be locked out of 4G, the carriers will be just as wary of overbidding.