Vodafone boss says 4G only appeals to "technology freaks"
Posted on 8 Feb 2013 at 09:43, by Gareth Halfacree
Vodafone's chief executive has dismissed 4G Long Term Evolution (LTE) high-speed mobile broadband as only appealing to "technology freaks," as his company reports a drop in profits.
According to the company's most recent financial report, UK revenue is down 5.2 per cent in the last quarter - possibly as lucrative heavy-use customers make the move to rival networks offering high-speed LTE connectivity, such as the T-Mobile and Orange conglomerate EE. Vodafone, meanwhile, still operates a 3G service using the slower High Speed Packet Access (HSPA) standard.
As smartphones and tablets grow in popularity, users are increasingly turning to mobile data to get online where Wi-Fi hotspots are not available. The increasing trend towards consuming - and sharing - high-resolution video on such devices also helps drive a demand for faster connections, with EE continuing to tempt heavy users away from their existing networks despite high prices and low monthly transfer limits and the promise from rival network Three that all its customers will be upgraded to 4G connections free of charge later this year.
Vodafone's chief executive officer Vittorio Colao, meanwhile, has dismissed his company's lack of 4G offering as an issue. "I haven't got reports of customers flying away to [rival networks for] 4G," Colao told The Guardian following his company's financial statement. "The kind of people who are going for [4G] are technology freaks."
Technology freaks they may be, but they're also one of the most lucrative customer types: people interested in 4G typically consume more data than average, meaning they are on more expensive monthly contracts or pay out-of-allowance charges for excess data. They also tend to be heavier users in general, and have more expensive LTE-capable smartphones - which, if purchased at a discount as part of a contract, means even higher monthly payments.
It certainly seems like Vodafone is struggling to attract these high-value subscribers: the company's financial report shows it gaining 230,000 subscribers in the UK in the last quarter, but the 5.2 per cent drop in revenue means that these - along with the bulk of its existing 19 million plus user base - are on low-profit contracts with light usage.
More networks are expected to launch 4G services later this year, following an auction of radio spectrum by communications watchdog Ofcom - and, despite Colao's dismissal of the technology, Vodafone will certainly be among them.
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