Shared Data Plans Add Heat to the 4G and Tablet Markets

EE Can Tap into Booming Tablet Sales with New Shared Tariff

Tomorrow’s launch of shared data plans by EE may turn out to be the biggest story of the summer for UK networks (see Instant Insight: EE Announces Shared LTE Data Plans). The operator has notched up over half a million LTE customers despite a generally lukewarm reception from the public, but it’s the advent of shared data tariffs that’ll prompt the kind of adoption of 4G services that all operators are hoping for.

And EE’s introduction of shared data plans soon after the launch of O2 Refresh means the UK is now seeing the start of the revolution in tariffs that I’ve been predicting.

European operators are keen to emulate carriers like Verizon Wireless and AT&T in the US, which let customers share a single data allowance among multiple devices. This type of plan encourages subscribers to connect more smartphones and tablets to the network, which should drive up higher data revenue at a time of dwindling returns from voice and text messaging. Nevertheless, EE joins a select band of European operators with shared plans: so far, Telia in Sweden and O2 in Ireland are the only other European operators to have launched the concept.

Verizon Wireless has seen phenomenal uptake of its Share Everything tariff. After just nine months, 30 percent of post-paid accounts had already migrated to the new plans and despite higher overall data prices the carrier has seen customer numbers increase. As subscribers start to become locked in to the carrier, it should also see a reduction in churn.

Shared data tariffs offer a crucial opportunity for operators to capitalise on the fast-growing tablet market. To date, they’ve largely missed out as tablet owners have been very reluctant to sign up to an additional contract.

As shown in this chart, we’ve seen huge growth in the UK tablet market this year alone. Shipments in the first quarter reached 3.3 million units, up more than 250 percent on the same period in 2012. Growth has been driven an abundance of attractive and affordable Android devices. Our recently published forecasts show that we expect shipments to rise to 17 million for the full year.

EE’s move gives it an opportunity to tap into this burgeoning market ahead of its rivals. Vodafone’s CEO, Vittorio Colao, has made no secret of his desire to follow the US model and launch shared data tariffs. But, along with O2, it’ll need to move quickly to prevent EE stealing a march in this increasingly relevant sector.