Back in April I looked at some of the issues surrounding Everything Everywhere’s proposal to launch LTE services over its existing 1800MHz spectrum, noting that all parties, regulator and operators, have shot themselves in the foot by delaying the upcoming 800MHz and 2.6GHz spectrum auction. With O2 and Vodafone complaining about state aid on the one hand, and Ofcom issuing consultation after consultation on the other, it was beginning to look as if the UK might never get 4G.
So it was satisfying to see today’s news that Ofcom has authorized EE to go ahead with its plans. The operator can therefore launch 4G services at any time from 11 September; this means we can expect it to move fast, as it has already been preparing for this day by rolling out retunable 2G/4G base stations across the country.
The decision may also prove beneficial for another operator, as the varied licenses permitting 4G use are applicable to EE’s entire 2x60MHz block of spectrum. This includes the 2x15MHz it is required to divest as a condition of the merger between T-Mobile UK and Orange UK two years ago; Hutchison Whampoa’s Three network appears to be the most likely candidate to buy this block. However, even if this sale goes through, EE would be keen to hold onto its advantage as LTE first-mover, so Three likely wouldn’t receive the spectrum for another year.
How much of an advantage will this present? Depending on the timing and duration of the upcoming spectrum auction, EE could launch its LTE services around a year earlier than its competitors. LTE would also give customers in rural and underserved areas access to high-speed internet for the first time, depending on coverage obligations, thereby increasing EE’s share in mobile broadband. However, rural customers present a relatively small percentage of the population, and a key part of EE’s advantage will depend on whether there are enough compatible devices on the market. LTE networks in several other countries run on different frequencies, such as 800MHz or 2.6GHz, so users couldn’t simply bring their own devices from abroad.
Of course, EE’s new licenses take effect just a few days before Apple is rumored to be launching its next iPhone model, which is expected to support LTE. Keeping in mind the flap earlier this year over the new iPad not supporting European LTE frequencies, there’s no guarantee that the new iPhone will support LTE over 1800MHz – but if it does, that would make EE the only network where you could use the device to its full potential.
The danger, however, is that Vodafone or Telefonica could take Ofcom to court and thereby delay not only Everything Everywhere’s 4G launch, but also the auction scheduled for early 2013. The best way for them to mitigate Everything Everywhere’s advantage at this point should instead be to ensure the 4G auction proceeds, as planned and on schedule, while investing in upgrading their networks to HSPA+, which Three is rolling out. And if we want to be really cynical, they could rebrand their HSPA+ networks as 4G, as some operators in the US have done…
That said, it’s also worth noting that the decision may prove beneficial to O2 and Vodafone. With EE able to offer LTE on its existing spectrum, it would need less of the new spectrum, which means more for the other bidders.
So while delaying this decision may seem advantageous in the short-term, allowing it to go forward means that everyone will be able to enjoy the benefits of 4G sooner.
Will regulators ever be able to catch up with the rate of change in the telco/tech industry?
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