FILE PHOTO: A woman holds a phone as she passes a Vodafone  store in London.
FILE PHOTO: A woman holds a phone as she passes a Vodafone store in London.

Vodafone switches to 5G as high-speed battles begin

By Bloomberg Time of article published Jul 4, 2019

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VODAFONE Group switched on the UK’s second 5G wireless network yesterday, kicking off a commercial battle with dominant rival EE that could shape a decade of sales.

The technology’s faster download speeds and more reliable connections give the first-movers an opportunity to snatch a bigger share of a saturated market. Back in 2012, EE - now owned by BT Group - launched 4G services almost a year ahead of the pack, an edge that cemented its position as the UK’s largest mobile carrier.

Vodafone isn’t making the same mistake again. Its 5G service went live just a month after EE’s, giving both companies a chance to grab business with early adopters. Britain’s other two mobile networks - CK Hutchison Holdings’ Three UK and Telefonica SA’s O2 -- aim to offer 5G by the end of the year.

The stakes are arguably higher than with 4G. Europe’s phone industry has been stagnating for several years, partly because handsets have become more expensive and offer fewer appealing features with each upgrade.

That’s dampened an important source of revenue for the network operators. 5G marks a rare boost in power and speed.

“5G is a massive opportunity for the smartphone sales business of operators like Vodafone,” said Canalys analyst Ben Stanton. “For the first time in a decade, customers will be compelled to upgrade both their device and their tariff at the same time.”

EE has plastered 5G ads across big cities and enlisted rap star Stormzy in its biggest-ever marketing effort, a spokesperson said. It offered 5G connections at the five-day Glastonbury music festival, where Instagram-happy smartphone users gobbled up 104terabytes of data, 1000 times more than at the same event in 2010, according to EE.

5G gives Vodafone a chance to reset its brand after a period of intense customer complaints and cancellations that peaked in 2015, said Ben Wood, an analyst at CCS Insight. In March, Vodafone poached EE’s former head of marketing, Max Taylor, to direct its consumer division.

“If you can associate your network brand with being the best for 5G then that’s going to be a big leg-up on your rivals,” said Wood.

Vodafone appears to be slightly undercutting EE on 5G prices. The total cost of a 5G Samsung Galaxy S10 and two-year contract is £1637 (R29171) for Vodafone’s cheapest advertised tariff. That gets you 5 gigabytes of data per month versus £1806 for an EE plan that offers the same phone with a monthly cap of 10 gigabytes.

New 5G users should beware however: using a 300 megabit-per-second connection, it’s possible to chew through 5 gigabytes of data in about two to three minutes, meaning that if a consumer wants to take full advantage of the faster networks, they’ll have to pay for bigger data bundles.

The two carriers are starting the services in major cities and aim to reach more than 15 urban centres by year end. The networks can handle far more data than 4G and could end up being 100 times faster, pushing down operating costs.

Yet the commercial opportunity is still clouded in uncertainty.

All the UK carriers are rolling out hundreds of 5G radio antennas supplied by Huawei Technologies, before the government has decided whether to restrict the Chinese vendor over concerns that its 5G systems are vulnerable to espionage or disruption.

If it does, the companies could have to replace Huawei gear with equipment from alternative suppliers.

The UK is the biggest European market so far to offer competing 5G services.

Two Swiss networks, Sunrise Communications Group and Swisscom, began theirs earlier this year. 


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