UK regulator Ofcom has said that there is nothing stopping EE’s rivals, such as Vodafone and O2, from putting in an application to alter their 900MHz spectrum licence for LTE usage. A ruling in early 2011 meant that all operators are now free to use their 2G spectrum for 3G services, so extension of that same ruling to encompass 4G would be a small amend.
Potentially, this means that Everything Everywhere, the firm that owns the Orange, T-Mobile and new EE brand in the UK, could have its one-year monopoly on LTE in the market cut short. Its rivals would no longer have to wait for the UK LTE auction, scheduled for early next year, to launch competing 4G services.
At the launch of EE, CEO Olaf Swantee countered claims that the 900MHz LTE ecosystem was not as strong by identifying that three of the five LTE devices to launch on EE’s network are also available with LTE900 connectivity. To be fair, that statement does confirm that the LTE900 ecosystem is indeed weaker, 40 per cent weaker to be exact, but it does highlight the fact that an ecosystem does exist.
However, Bengt Nordström, co-founder and CEO of consultancy firm Northstream, believes that while Vodafone and O2 should be given the option to refarm their 900MHz spectrum for 4G, freeing enough of it up to launch LTE would be a challenge. This is because operators in the UK are still selling GSM phones and a large chunk of the user base is reliant on GSM900 spectrum.
“My perception is that when you are on HSPA, you tend to use 2100MHz, but the coverage isn’t that great, so all operators are really dependent on the fallback to GSM/EDGE,” he said.
He added that launching LTE only really makes sense if operators can allocate at least 10MHz to 20MHz, which would be tough for them to do.
“I’m not sure how viable it really is for them to effectively free up enough 900MHz spectrum without really creating congestion in the GSM band,” Nordström added.
Despite that, he argued that Ofcom must still take steps to repair the damage it has done to the market, by allowing one operator a monopoly on LTE. EE has sunk a significant amount, £1.5bn into LTE already, but Nordström advised EE’s rivals that investing more in HSPA may be the best route forward.
“1800MHz is the best spectrum for LTE, so if I was in O2 or Vodafone’s shoes, I would be thinking: How could I offer comparable service? I think that would mean I deploy HSPA more extensively than I had planned to. If they deploy HSPA or HSPA+ more extensively, from a user perspective, there would probably not be a huge difference between that and LTE,” he said.
“Then I would really have an open and honest discussion with the regulator and say they have given one player a tremendous advantage and to maintain their competition, what can you do for us?”
Despite all these arguments, Ofcom stands by its decree that there are only benefits to be reaped by consumers with EE being given a supposed ‘head start’, with no detrimental effects to competition in the long term.
Ofcom has also dismissed the idea that EE could gain from its exclusivity deal with Apple as the next generation iPhone is only available as an LTE1800 device. In a recent report, the watchdog found that O2 UK gained no benefits from its exclusivity deal with Apple for the first generation iPhone. In fact, the deal cost the operator a fortune in unsubsidised handset costs and caused much embarrassment when the operator’s network subsequently fell over under the weight of demand for data services.
With Amazon and Google launching smart home initiatives, have the telcos missed out on their chance to cash in on this market?
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