UK Operators Jostle for Position on High Street

Battle to Sign up New Customers Intensifies as Christmas Approaches

Last week, amid the current frenzy of deal-making engulfing UK operators, I paid another visit to a Westfield shopping centre in London to compare strategies at the point of sale.

It’s hard not to notice just how far 4G smartphone prices have fallen. The lowest-priced pay-as-you-go deal I found was £65 for the Vodafone Smart 4 Turbo — a price that would have been unthinkable just 12 months ago but is bound to prove highly attractive to many Christmas shoppers. A greater emphasis on TV was also apparent, as operators position themselves for an assault on the multiplay market in 2015. However, networks appear to remain unconvinced about the opportunities in the wearables market, and few models were displayed prominently in the shops despite continued hype.

Vodafone’s store put a leading focus on Now TV. The operator is offering access to the Internet TV service following a deal recently struck with Sky — a move consistent with Vodafone’s strategy for inclusive content, aiming to drive higher data usage over 4G. The operator has already offered access to Netflix, Sky Sports and Spotify Premium with certain tariffs, and the company now includes a three-month Now TV movies pass for no extra charge in all Red 4G plans.

Sky and Vodafone have worked increasingly closely over the past year and I expect this relationship to continue ahead of Vodafone’s launch of consumer broadband and TV services in early 2015.

A focus on own-brand devices was also evident. The Vodafone Smart 4 Turbo and Smart 4 Power phones were prominently positioned among the swathes of Samsung and Sony devices that adorned the shelves. The remarkably low prices should give a much-needed boost to Vodafone’s sluggish 4G sales.

As expected, EE is heavily promoting its TV service, and has dedicated an area of store to it. The operator launched a TV set-top box in early November as part of a strategy to push hard into multiplay. Content is limited, but EE says the service is unique in several areas, its main selling point being the ability to allow up to four compatible tablets or smartphones to view different programmes at once. EE says that — at just £9.95 per month plus £15.75 line rental — it’s the lowest-priced broadband and TV package with recording features in the UK.

The operator is also strongly promoting a prepaid offer whereby customers receive 100MB of free data every month when buying any smartphone or tablet. The UK prepaid market is becoming increasingly competitive as device prices fall, and I anticipate that greater attention will be given to this profitable segment in 2015. Such a strategy could be particularly significant for EE, which lost over 150,000 prepaid customers in 3Q14 alongside reports of increases for rivals O2 and Vodafone.

Three’s recent move to ditch the One Plan was immediately apparent in its store. I was initially surprised about the move given the strong awareness of the tariff and important role it has played in recent customer growth. However, Three needed to simplify a complicated mix of tariff plans as it focuses on the key messages of inclusive 4G, free 0800 calls and Feel at Home, all of which continue to be strongly advertised in its stores. Three has moved away from unlimited tethering, a logical decision given the rising number of devices now owned by subscribers in the UK.

O2 is promoting its exclusive deal with Amazon to sell the Fire smartphone and tablet. The operator boasts a successful history in exclusive deals, having initially been the sole provider of the iPhone in the UK. The shop I visited had an area dedicated to Amazon that sat alongside similar spaces for Samsung and Sony devices. Customers buying the Amazon smartphone with 500MB of data can take the Fire HD7 tablet for just £1 and receive Amazon Prime, worth £79. Online, Amazon is selling the Fire smartphone with an O2 contract.

O2’s shared data plan was less apparent in the shop, but allows up to ten devices can be added on a single plan with between 1GB and 20GB available to share. The operator very quietly launched the tariff in recent weeks, following in the footsteps of EE and Vodafone.

My trip revealed some interesting strategies, but I saw little that was truly game-changing. There was nothing on the connected home, for example, or even a hint at LTE-Advanced — even though EE and Vodafone say they have launched the technology. It may be that operators prefer to take the less risky approach to focussing on traditional areas such smartphones and tablets in the run-up to Christmas. However, it could indicate that they are readying for a bigger push into multiplay in the new year. The retail landscape is likely to transform once again.