August 23, 2012

Crucial Step Forward on 4G for Everything Everywhere

Crucial Step  Forward on 4G for Everything Everywhere

Crucial Step Forward on 4G for Everything Everywhere

Everything Everwhere ( EE ) had been looking for a guarantee that it would get a chunk of the sub-1GHz spectrum on offer in the 4G auction, bringing it into line with Vodafone and O2’s spectrum holdings.

An Everything Everywhere spokesman stated: ‘We are pleased that Ofcom is moving in the right direction and we recognise that we need to get this process moving now before the UK falls further behind the rest of the world.’

Three is also likely to have been angered by a sub-1GHz cap, as it was also looking for a guarantee. A spokesperson for Three said that Ofcom’s decision on the structure of the auction would have a lasting effect on value and services made available to mobile customers.

The operators all said they would take some time to fully take in all the implications of the rules, although an O2 spokesman said that the detailed rules ‘represent a significant step towards 4G launch in the UK’.

A Vodafone spokesman added: ‘Ofcom appears to have created a mechanism to deliver the spectrum needed to run competitive 4G services and we welcome the work it has done.’

The auction for the sale of both 800MHz and 2.6GHz spectrum is due to take place next year. The end of March will see licences issued and services starting to roll out in the summer.

Some spectrum has been set by for a fourth company.

The released rules are mostly what was expected following the proposals in January – minor changes include the spectrum being reserved for a fourth operator.

One company that wins one of the 800MHz lots of spectrum will be required to offer indoor 4G reception to 98% of the population by the end of 2017. They will also be required to offer that service to at least 95% of the population of England, Scotland, Wales and Northern Ireland.

Brian Potterill, who is the director of PwC’s telecoms strategy team, said the auction could raise between £3bn and 4bn – far less than the £22.5bn that was raised by the 3G auction. He added that putting by a chunk of 800MHz spectrum could see prices pushed much higher than the reserve price. Potterill said this would be the focus of the bidders’ strategies in the months to come.

Principal analyst for telco strategy at Informa, Thomas Wehmeier, said that although the UK was behind other markets when it came to launching 4G, both operators and consumers would have the benefit of lower equipment prices, a better choice of devices and more mature technology.

But of Ofcom’s move to include a fourth network, he said it was, ‘a huge risk given that in the long-term it remains uncertain whether the long-term profitability and sustainability of the mobile sector and, therefore, consumer interests will be best served by competition between so many different players at the national market level.’

MD of CCS Insight, Shaun Collins, applauded Ofcom for ‘sticking to its guns’. He suggested that TalkTalk, BSkyB, Google and Virgin Media and Google could all be rivals to Three in a bid to be the fourth operator. He said operators needed to forget about all the controversy and get on with being involved in the auction so that 4G could be offered as quickly as possible.

Practice leader for regulation and policy at Ovum, Matthew Howett, said he thought it unlikely that a new entrant in the mobile market would emerge. ‘Given the insatiable appetite for data from consumers in the UK, we can be quite certain that it will be a hotly contested auction with all players keen to ensure they get adequate spectrum to support further growth in demand.’

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