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Wireless

KPN's 4G strategy to build on existing services

Wednesday 16 January 2013 | 13:02 CET | Background

KPN has announced the launch of 4G in the Netherlands, and at the same time, the Dutch operator is addressing its existing network. The operator wants to be ready for the future when mobile data use is even more commonplace than today. According to figures from the GSA, 145 mobile operators in 66 countries have already launched commercial LTE services. By the end of 2013, this is expected to reach 234 networks in 83 countries. KPN will join the club in February when 4G services are launched in the Amsterdam region and north of the Randstad.

Full networks upgrade

The launch of 4G is nowhere near as spectacular as the introduction of 3G networks a decade ago. The Dutch are used to mobile broadband now, and KPN expects data use to only increase further as more and more applications are adopted for the service. According to John van Vianen, director at KPN Zakelijke Markt, 50 percent of all media streams are already over mobile devices. 

Telecompaper estimates the average mobile data use of postpaid subscribers at 300-400 MB per month. Dutch regulator Opta calculated that each smartphone, tablet or dongle uses an average 177 MB per month in the second quarter of 2012. Non-voice services, including SMS and data, are now good for 40.7 percent of the total service revenues of Dutch mobile providers. 

To support the continued growth in mobile data, more capacity as well as coverage is needed. In cooperation with Ericsson and Huawei, KPN is not only starting the roll-out of 4G but also launching a comprehensive operation to upgrade its existing networks. These include 4,000 sites, 11,000 antennae and 250 daily employees at 60 locations each week, nationwide.  

Meeting expectations 

“A big investment in the Netherlands” is what Van Vianen called the roll-out of the new network making faster mobile internet possible. KPN will be the first provider in the Netherlands to offer LTE services. The competition will follow later this year. The plan is for the 4G network to cover the entire country by the second half of next year.  

The aim is for the 2G and 3G network upgrades and 4G roll-out to be completed by mid-2014. While KPN is not providing any figures on the total cost of the operation, networks director Eric Kuisch said the company will spend "a few tens of thousands" of euros at each site.  

KPN is targeting two customer groups with its 4G proposition: young people using the KPN brand Hi and the business market. “Seventy percent of business users see the advantages of 4G, as do half of smartphone users," according to Van Vianen. Hi customers will appreciate especially the extra network capacity and higher speeds, to support video applications and calls, KPN expects. Business customers will gain access to new applications such as mobile video conferencing and tele-learning. 

That customers might be left disappointed if the promised speeds are not delivered, is not an initial concern for KPN. “If we look at neighbouring countries that have already rolled out commercial LTE, then we see satisfaction. Furthermore, it's not like we're starting from scratch; we have enough experience. With this we can meet expectations," said Van Vianen. 

T-Mobile has said it plans nationwide 4G coverage by mid-2014. It will unveil its 4G plans next month. T-Mobile will roll out LTE in the 1800MHz band, while KPN is using 800MHz frequencies. As a result, the iPhone 5 will only work on the T-Mobile network initially.  

Proposition 

The existing KPN Internetbundel with 2.5 GB costs EUR 25 per month. The price will be unchanged when access to 4G is added. Customers can also choose a new 4G internet bundle with 5GB for EUR 35 per month. Customers will be regularly updated throughout the month on their data use and can switch to a higher or lower bundle free.

To the consumer proposition for 4G, using the same price for the current bundle of 2.5GB, must also be added the cost of leasing a 4G smartphone. Still, this means that customers get a 'free' 4G service with an increase in the theoretical maximum speed to 25Mbps. With the new plan for 5GB at EUR 10 extra, the maximum speed rises to 50Mbps. The same options are available for use with a laptop or tablet, and the same as with the smartphone plans, customers must still pay the additional line rental fee of EUR 10 per month (KPN Instap pakket).  

Youth brand Hi will also offer a new subscription, the Hi XL 4G Abonnement. This offers 4GB per month at the top speed for EUR 32.50. 

Business

The existing smartphone, laptop and tablet subscriptions for business users will also be expanded with new 4G variants. The business smartphone plans BedrijfsBundel, BedrijfsFlexibel and BedrijfsOnbeperkt with at least 1GB data per month will be available with 4G. Business customers will also be able to switch to a 4G plan at any time, free. KPN said the new 4G plans cost the same as the existing 3G offers, but a comparison shows that the prices are 2.4 percent higher. This is likely due to KPN's annual price increase from 01 February.  

The business laptop/tablet subscriptions will also be available in 4G versions, from 3GB per month. Mobiel Internet 3GB costs EUR 43.52 per month with a tablet and EUR 33.28 with a dongle or MiFi router and micro Sim. Mobiel Internet 8GB costs EUR 64 with a tablet and EUR 53.76 with a dongle. These are also priced higher than existing plans. The 8GB plan costs 6.7 percent more with a tablet and 7.5 percent more with a dongle. The other package has more data (versus 2.5GB in the existing version), but has also gone up in price, by 16 percent for the tablet version and 21 percent for the dongle plan. The higher price may be due to higher hardware prices for 4G devices. KPN still offers device subsidies to the business segment, rather than leasing like with consumers. Under the current offers, tablets, dongels and routers are offered free with two-year subscriptions.

Reasonable prices

The introductory pricing strategy appears reasonable. It has also been integrated into the existing packages (except for Hi), lowering the barrier to entry for customers to switch to the new services.

KPN customers will experience initially limited 4G speeds, as the service will be available only in the Randstad. In areas without LTE coverage, they will remain on the 3G network. 

In Germany, where LTE services have been available for some months already, 4G has also been integrated in existing plans. The main difference is that both Vodafone Germany and T-Mobile Germany offer with all their packages (even the smallest) access to LTE for just EUR 10 per month extra. The amount of MB is also increased, depending on the package chosen. In Sweden, Tele2 is offering a separate 4G subscription that also includes voice and SMS. For example, a plan with 300 minutes, 300 SMS/MMS and 1GB data at speeds of 20-40 Mbps costs SEK 189 per month (EUR 19.52). For SEK 339 (EUR 35), customers get unlimited calls and SMS (FUP 12,000 minutes and 10,000 SMS) and 3GB, and for SEK 489 (EUR 50.51), the plan comes with 10 GB data and unlimited calls and SMS. For a similar subscription with KPN, Dutch consumers will pay much more. 

Now the wait is on to see what the competition offers, especially Tele2. 



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