4G has been a long time coming to Ireland after a intense struggle between the incumbent telecoms firms over the spectrum licences, but, with the recent, much-heralded launch from Eircom, it’s finally here. Given Smartphone penetration in Ireland, it’s a welcome development. Consumers are crying out for 4G to make video calls and online gaming practical on the move. The big question is: who will be the winners and who will be the losers when it comes to market share?
Valuewalk looks at what the four main players, Eircom, Vodafone Group Plc (ADR) (NASDAQ:VOD) (LON:VOD), Time Three Wireless Inc. (CVE:TTW) (OTCMKTS:CLFZF) and O2 Secure Wireless Inc (OTCMKTS:OTOW), have to offer.
Eircom first out of the stalls
Eircom was first to launch 4G through its Meteor and eMobile brands. Herb Hribar, the American director of the former state telecom company, will be hoping that by getting a headstart on the others, 4G will turn around the fortunes of the Eircom, an organisation that just 18 months ago was on the verge of receivership.
But although first to market, Eircom’s initial coverage is sparse and only available in a few large towns. Furthermore, there isn’t a great choice of handsets, meaning some customers could play the waiting game and see what others are offering.
This hasn’t stopped the company spending a small fortune on developing the service. Eircom’s licence cost a cool €145 million and the company is set to invest another €330 million in the network over the next five years. Eircom has never been a big innovator, so getting the foot in the door with 4G is clearly a priority, as the company struggles to distance itself from a turbulent past. Valuewalk asked Paul Bradley at Eircom was it important for Eircom to be first to market with 4G?
‘Absolutely. We are delighted to be the first in Ireland to offer 4G services. It demonstrates our commitment to customers to lead the market by providing exciting new services at affordable prices. Anyone who changes to our 4G service will receive access to unlimited 4G data until March of 2014, as well as download speeds that are up to ten times faster than what is currently available.’
Is the launch part of a wider strategy showcasing a ‘new’ Eircom?
‘Our strategy is built around network investment across fixed and mobile platforms so we can offer customers access to superfast broadband either through the fixed line at home, or in the office, on-the-go through their mobile, or via WiFi. This new capability lets us bundle exciting services such as 4G and TV over a broadband connection while offering great value. Our ability to offer four services from one provider underlines just how much the company has changed.’
Vodafone Group Plc (ADR) (NASDAQ:VOD) (LON:VOD) is one step ahead when it comes to coverage. Can Eircom catch up and achieve 40% coverage by year-end?
‘Yes we are on schedule. We launched our service in Cork this week and will be expanding the service to Galway and Limerick by the end of October, giving us coverage in the four main cities of the country. However our plan is to continue with our rollout, reaching up to 70% of the population in two years and eventually 90% of the population.’
Vodafone quietly confident on 4G service
Given Eircom’s track record, it’s not surprising to discover its rivals seem unflustered that Eircom got to market first. Sheila Kavanagh, head of network development at Vodafone Ireland, referring to Eircom’s initial coverage in Dublin, Athlone and Carlow, said:
‘I’m not sure that one city and two towns constitute a launch.’
Vodafone wasn’t too far behind Eircom, turning on their 4G service on 14th October in five cities and 26 towns by November with plans to reach 50% population coverage by March. Vodafone Group Plc (ADR) (NASDAQ:VOD) (LON:VOD) has committed €500 million to upgrades over the next five years.
At present, only 2% of Vodafone customers have 4G enabled phones, while 5% of Eircom customers have 4G-enabled phones and many more will be tempted on board by the free upgrades Eircom is offering.
With regards to pricing, Vodafone Group Plc (ADR) (NASDAQ:VOD) (LON:VOD) is offering 20GB of data for €29.99 per month (ex. VAT) for bill pay customers – not too shabby! Although there will be no prepay tariff until next year.
Kavanagh claims uptake will be slow until handset prices fall, so initially, Vodafone Group Plc (ADR) (NASDAQ:VOD) (LON:VOD) customers will only be offered a SIM card, but a 4G Smartphone deal is in the pipeline in the run-up to Christmas.
Three in third
Eoin MacManus at Three also believes that uptake will be slow. He says that market growth will be ‘device dependent’. Three won’t launch their product until the end of the year:
‘It will be an evolution, not an revolution.’
When Valuewalk asked Three if they were worried about Eircom and Vodafone Group Plc (ADR) (NASDAQ:VOD) (LON:VOD) mopping up the market before they launch, Head of Mobile Networks, Joanna Kavanagh said:
‘Of the four mobile operators in Ireland, two have launched 4G only in the last 3 weeks, in a limited amount of locations and with a limited range of devices available, so the market will definitely not be sewn up by the time we launch.’
Regarding price, Three were keeping their cards close to their chest:
‘We have yet to reveal this but as with our current offers in the market, we will certainly offer great value to our customers.’
The O2 takeover
O2 Secure Wireless Inc (OTCMKTS:OTOW) has postponed its launch until 2014, as a result of a takeover by Hutchison Whampoa, owners of Three. Nevertheless, the company has still earmarked €200 million for 4G.
Paul Whelan at O2 Secure Wireless Inc (OTCMKTS:OTOW) is another that believes 4G isn’t going to be adopted quickly and that a mainstream market might be as much as 18 months away.
And the winner is…
Pricing, will, of course, be crucial. People won’t be keen to give up their existing tariffs for ones that are much more expensive. Surprisingly, Eircom has set the standard by offering tariffs that are comparative to 3G. Eircom’s offering also comes with the added bonus of no data cap for six months, but there will be a cap of 3GB for the entry-level package after the introductory period is up.
Together with the eFibre Eircom is rolling out for its next-gen fixed broadband and proposed ‘quad-play’ service consisting of broadband, home phone, mobile and TV bundles, it might be onto a winner. Hribar believes the low cost, high value TV product will sell the bundles. But UPC, Eircom’s main rival, is now looking to bring mobile into its ‘triple-play’ offering and BskyB recently launched broadband in the Irish market to complement their popular Sky TV offering and will no doubt be eager to compete on both product and price.
More than likely, the winner won’t be first to launch, but the carrier with the best coverage and the