Vodafone Under Pressure to Cut Tariffs as 4G Market Becomes More Competitive

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By Vittorio Hernandez | August 14, 2014 9:00 AM EST

British Telecom is preparing to place pressure on Vodafone to reduce its tariffs as competition in the 4G mobile broadband becomes tighter.

Reuters
A man and two passengers ride on a scooter past a shop displaying the Vodafone logo on its shutter in Jammu. Reuters

Telecom industry analysts said that to attract customers, Vodafone will match the faster Internet offered by competitors with little or no extra cost by bundling six months of free mobile access to Netflix, Sky Sports or Spotify.  But they said the offer would not protect Vodafone's market share as more consumers prefer to shift to 4G technology.

Commenting on Vodafone's bundling strategy, CCS Insight principal analyst Kester Mann said, "The approach Vodafone taken is very much to make 4G a premium-priced product."

"The challenge it has is that competitors have come in much lower. It's not clear that bundling content has worked. The type of people who would want Sky Sports mobile or Spotify subscriptions are quite likely to have them anyway through other routes," added Mann, quoted by The Telegraph.

As of June 2014, only 10 per cent of Britain's 9.2 million 4G users are Vodafone subscribers, but it holds a 29 per cent market share for 2G and 3G customers.

By late 2014, BT would enter again the consumer mobile market and eat a slice of the 7.4 million fixed-line broadband household market, and this would place more pressure on Vodafone to further cut its uncompetitive prices. BT previously challenged BSKyB in the pay-TV market in 2013 with an offer of free BT Sports channels to Internet subscribers.

Meanwhile, Vodafone Hutchinson in Australia said it plans to construct a purpose-built call centre in Hobart's central business district, scheduled for completion in December 2014. Sultan Holdings and Hansen Yuncken, Vodafone's construction and fit-out partners, would hire 240 more people during the construction phase.

The telecom giant is currently renting in the CBD since November 2013.

Vodafone General Manager for Customer Care Matt Paterson said, "By the time the new centre is operational in July 2015, Vodafone will have a combined workforce of more than 1,300 across its two Tasmanian customer service centres. Our Hobart customer service centre will support our Australian-based customer care team, who offer local service for Vodafone Red customers."

Its social media, sales and business support teams are in Kingston, south of Hobart. Paterson said that the telco is bucking industry trend by bringing back jobs to Australia instead of outsourcing them overseas where labour cost is significantly lower.

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(Photo: Reuters / )
A man and two passengers ride on a scooter past a shop displaying the Vodafone logo on its shutter in Jammu. Reuters
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