Why EE's 4G Tariffs Were Always Going to be High [OPINION]

EE faced a backlash this morning after publishing its 4G tariffs, but they were always going to be high, and for a reason.

The reaction to EE's announcement early this morning of its consumer and business tariffs for its 4G network was not exactly enthusiastic.

People jumped on the fact that for £36-a-month, EE's lowest consumer tariff, you would only get 500MB of data. Even on a 3G connection this seems a bit mean.

Obviously someone took the time to calculate how much time this would give you, and according to PC Pro, at the average download speeds of 12Mbps you would exceed this low cap in just over five minutes.

Add to this a complete absence of an unlimited data option and the excitement over the UK's first 4G network launching in just under a week's times, was quickly losing its appeal.

But, what did people think was going to happen? 4G for the price of 3G? Unlimited data plans letting users download gigabytes of films and music without so much as a second thought for others on the same network?

Premium

No, what has happened is what was always going to happen once Ofcom allowed EE to create a 4G monopoly in the UK. 4G is a premium service and you will pay a premium price for it. When it becomes less premium next year when O2 and Vodafone enter the fray, maybe then we will see a price drop, but EE was never going to give away 4G for free.

EE, formerly known as Everything Everywhere, has invested billions in re-farming its own 2G spectrum to be first off the line with 4G in the UK. Its shareholders, and parent companies France Télécom and Deutsche Telekom, will want to recoup that investment, especially while it is the only player in the 4G game.

EE has announced five different 4G plans. All include unlimited calls and text, and each has a different data allowance - 500MB, 1GB, 3GB, 5GB and 8GB. Calls and texts, once the cash cow of mobile networks, will soon be all but obsolete, with data becoming the real money maker.

Therefore, an unlimited data allowance was never going to be feasible on 4G networks. Yes, there are truly unlimited data allowances on 3G networks, notably from Three, but because of the limitations of the 3G networks themselves, carriers are happy to take the hit from the few heavy users, to attract those who don't even need an unlimited plan.

However, with EE's 4G LTE network promising five times the download speeds of the current generation 3G networks, things will change.

Live Stream

Currently 3G networks are not fast enough to stream live TV or films in almost all cases. Therefore no one does so on their smartphone or tablet while on the move. With 4G, there will be no impediment to streaming HD content from the web, whenever you want.

No impediment that is except for the one put in place by EE with its data caps. Even at 8GB, heavy users will find themselves restricted and some will end up paying for more data every month.

Consider if EE had rolled out an unlimited plan. As well as costing EE huge amounts of money in lost data add-ons, the limitless nature of the bundle would mean users would not think about tying up the network downloads and streaming vast gigabytes of data aroudn the clock

Add to this the fact that tethering is included free with all price plans which could see you sharing your 4G connection with your laptop and consuming even more data at speeds normally seen on a decent home broadband connection.

No, unlimited data plans where never going to be feasible, and while paying £46-a-month for a decent 4G data allowance (3GB) may seem exorbitant, EE is going to cash in on its monopoly for as long as it can get away with it.

While EE's vice president of business, Martin Stiven, told us the pricing had been done to drive volume of customers to the new service, this doesn't seem likely, considering a two-year contract will cost you over £1,100 at least - and that's not including the up-front price of the phone.

Doom and gloom

However, it is not all doom and gloom. EE has also announced SIM-only price plans, which start from £21-a-month (500MB) and go up to £36 (5GB). That means that if you are already lucky enough to have purchased the new iPhone, you can get 4G access for £31-a-month with a 3GB data allowance.

You should also consider that the UK may be late to the 4G party, but our cousins in the US are still paying considerably more for their 4G access than we will be in the UK.

A two year contract with AT&T for access to its 4G network, with unlimited calls and text, 3GB of data will cost you $99-a-month (£62) - and that's before sales tax which could be 4.7 percent if you live in Utah, 7 percent in Rhode Island or up to 10 percent elsewhere

Add in an iPhone 5 handset and you'll be paying $300 up-front for the 16GB model, as well as a one-off 'activation fee' of $36.

Yes, EE's 4G price plans are expensive. But they were always going to be expensive and 4G will remain a premium product for those who can afford it and really want it. Just like all new technology, there will be a period when it seems out of the reach of most people, but within 12 months 4G should be a lot more affordable when some competition drives prices to a more realistic level.