Who’s in? Deadline for applications for UK 4G spectrum auction closes

This post is by Thomas Wehmeier, Principal Analyst, Operator Strategies, Informa Telecoms & Media

Following swiftly on from EE’s launch of the UK’s first live 4G network just a few weeks ago, today marks the next important milestone in the establishment of a genuinely competitive market for 4G services in the UK.

The passing of today’s deadline for prospective bidders to submit applications takes us one step closer to the completion of the highly controversial, long-awaited and largest ever auction of spectrum in the UK. Bidding itself won’t actually start for real until January and we’re likely to see weeks of intensive bid rounds until the results proper are finalised by February or March next year.

As far as the UK’s mobile operators are concerned, this can’t happen soon enough. Despite the encouraging signs we’ve seen since EE went live, the UK is still lagging far and away behind the world’s most advanced 4G market(s). To put it context, by the time the remaining 4G networks are switched on at some point in the middle of next year, more than one-third of Korean and about 20% of Japanese consumers will already be actively using 4G services in their respective countries.

But that’s not to say that we don’t expect to see a marked acceleration in the pace of 4G adoption in the UK next year. By that point, most of the high-end flagship phones on sale in the UK will support 4G technology, we can expect to see some pretty competitive pricing as the markets kicks into life and the inevitable blanket market campaigns are sure to lift interest in and adoption of 4G amongst UK consumers.

How much is the auction expected to raise and who will bid?

It’s fair to say we’re expecting the amount raised to represent just a fraction of the record £22.5 billion spent during the 3G licensing round in April 2000. We have to remember that those were exceptional times, before the dotcom bubble burst and at the height of hype around mobile, and the industry will be much more cautious this time around, not least because of the weak economy and the declining revenues that many operators are suffering in the UK and across Europe.

In his recent Autumn Statement, the UK Chancellor George Osborne pegged the amount the UK Treasury is hoping to raise at £3.5 billion, which puts the official view slightly above industry expectations, but broadly on par with the amounts raised in similar auctions in other European markets such as Germany.

We’re expecting the auction to attract all the usual suspects , meaning the UK’s existing mobile operators Vodafone, Telefonica O2, 3 UK and, of course, EE, who’ll be looking to bolster their existing 4G spectrum position.

What we don’t know and can’t predict is whether we’ll see any wildcard bids. There’s been plenty of industry speculation about the possibility of some of the UK’s other telecoms and media powerhouses, the likes of Virgin Media, Sky or BT, entering the fray, but the experience of looking to other markets that have held similar auctions means we should be surprised if there is a genuinely disruptive and large-scale bid from one of the players. It can’t be ruled out, but it would certainly be unexpected.

The LTE World Summit, the premier 4G event for the telecoms industry, is taking place on the 24^th-26^th June 2013, at the Amsterdam RAI, Netherlands. Click here to download a flyer for the event.

EE names its price

After months, nay years, of waiting, what is arguably the most important date for UK LTE is here. EE, the network that will launch the UK’s first national LTE service a week today, has announced its prices, giving UK consumer a first look at what they will have to pay to use the service. And as they say, the proof is in the pricing.

The prices cover subsidised smartphone plans, SIM-only plans, mobile broadband USB,  mobile wifi devices, and fixed-line broadband using both standard ADSL and fibre-to-the-cabinet, but what will interest the man/woman on the street though are the phone plans – and the starting tariff is £36 a month for a phone with unlimited calls, unlimited texts—and 500MB of data. A 1GB allowance is £41, 5GB takes it up to £36. The top-tier is an 8GB allowance at £56.

Move to SIM-only and 500MB will cost you ‘only’ £21. Its £25 for 1GB, £31 for 3GB and £36 for 5GB. There’s no 8GB SIM-only option for some reason.

This could be a problem.

Assuming a download speed of 15Mbps (we actually saw 27Mbps in the speed test at launch), and that entry-level 500MB of data could be downloaded in less than five minutes. Which, assuming 43,800 minutes in a month, would leave you with 43,795 minutes remaining with which you can’t not use the internet on your 4G phone.  You could pace yourself of course – but that would equate to around 10 seconds of full-tilt LTE a day. Whoopee.

Of course, that’s an exaggeration of real world use – you don’t tend to use that much data in one go on your phone, but even snacking on data, 500MB is a little on the lean side, to say the least.

What these expensively priced data buckets don’t seem to take into account is the way that LTE should change the way people uses their phones. Fast access will make using cloud and streaming services second nature – but if they do, they will run into their data allowances almost immediately.

Olaf Swantee, the chief executive of EE told Rory Cellan-Jones, Technology Correspondent for the BBC that, “”We really think we’ve priced it at the sweet spot,” and, “it’s all based on months of consumer research.”

From the look of my Twitter feed the UK public would beg to differ.

This from UK tech site TechRadar – “Lots of anger about EE’s 4G pricing – if it was £36/month for 1GB, would that sway you? What would you be willing to pay?”

This from a punter – “If I switch to a 4G contract (still paying £36/month) my data allowance goes from Unlimited to 500MB! Kept that one quiet! @EE.” and “Over promising and over pricing! When will@ThreeUK have 4G.”

The Editor of PC Pro said, “EE has just blown all first-mover advantage with those ridiculous 4G tariffs. Shareholders must hold CEO accountable.”

And this from yours truly – “Initial reaction to @EE prices – they’re horrible. 5GB SIM only for £36? That’s a 260% hike on what I currently pay for data. I’m out. #4G.”

On the plus side there are some real positives. EE has said that tethering is allowed, as is VoIP and for £5 a month extra, the tariffs can be used when roaming across Europe and is several other selected countries, among which are Australia, China, India, Israel, Russia and the USA. In addition, free access to BT wifi is included, and as a value-add, EE is offering EE Film, which enables customers to stream one film of choice to any device a month, without impacting their data allowance.

The fact that despite promises that EE would only place a modest premium on LTE, these are in fact premium prices for a premium service. The mass market will have to wait for the other networks to join the LTE party (and if you’re an die-hard iPhone fan that will mean an iPhone 6 will be required  – the iPhone 5 will not support 800/2.6GHz LTE).

From a pure industry perspective, EE’s rivals in the market should be pleased with EE’s pricing strategy. Theyr’e not too low that all the value has been taken out of the market at the start, and there’s scope for them  to be more competitive when their services come online.

When that happens EE will be likely to be forced to lower prices, but for now, the price levels indicate that it is trying to take as much advantage of its first mover position as possible to generate revenue. That‘s good news for the industry – but less so for the consumer.

Good vibrations in the UK: Vodafone and O2 come together

There have been major developments in the UK mobile operator market today with the news that Vodafone and O2, the UK arm of Telefonica, would be coming together and sharing resources in order to build their networks faster.

It’s a direct response, if somewhat delayed, to the threat from Everything Everywhere, a joint venture between Orange (France Telecom) and T-Mobile (Deutsche Telekom ), and Three (Hutchison Whampoa). It’s not an entirely new venture, as the two have been sharing some sites since 2009 in a venture called Cornerstone, but this takes it from 4000 sites up to 18,500 masts and towers shared.

It’s not a full joint venture as with Everything Everywhere – customers won’t be able to choose between Vodafone and O2 signals, and the two companies will continue to compete in every other way.

It’s great news.

The two operators claim that this deal will bring 2G and 3G coverage to 98 per cent of the UK population by 2015, finally dealing with the many notspots that continue to plague this not particularly large country.

What’s particularly welcome is that the pair claim that it will enable them to bring 4G,by which we have to assume means LTE, quicker than they would separately. Ofcom, the UK regulator stipulates that there should be 98 per cent coverage of 4G by 2017 so this should help them meet that claim.

Network sharing does seem to be the way forward, especially in these cash strapped town. It simply makes sense from an efficiency point of view. Is there much sense in having the same areas covered by multiple networks by rival network offering essentially the same service.

The two companies said that the consolidation could also enable them to trim the fat and they could shrink the sites they run by 10 per cent.

Speaking at the LTE World Summit last month, Eduardo Duato, CTO at Orange Spain said as much, pointing out that while the US makes do with just four major networks, Europe, roughly the same size land mass, has over 100. He called on his local regulators and all those across Europe to support operator’s sharing prospects. “It doesn’t make sense to have this many networks [in Europe]” he said “we have to move to LTE network sharing.”

Vodafone and O2 seem to agree with him.

The move will mean that there will essentially two networks running in the UK – the MBNL network that powers Everything Everywhere and 3, and the extended Cornerstone network of Vodafone and O2.

So what do we have here then? Intelligent combining of resources, offering the potential for much improved coverage and accelerated roll out of next gen LTE services, and all with some extra cost cutting thrown in.

It all sounds alarmingly, well, sensible. At this rate, we could have operators making money and even satisfied customers.

Crazy times.

New iPad no longer called iPad + 4G in the UK

After a long, drawn out saga, Apple has finally been made to change how it promotes the new iPad on its UK web store. After complaints to the UK advertising authority, ASA, from this week, the word 4G does not appear on its UK web site. Instead, the SIM equipped device is now just referred to as ‘Wi-Fi + Cellular’. No more confused UK punters.

To be honest, I’m not particularly keen on the term ‘Cellular’ as iIt has a distinctly US flavour to it. We don’t call our networks ‘Cellular’ any more than we spell flavour without the letter ‘u’.  But it is a more realistic description of the devices capabilities in this country and as such a reasonable conclusion. Can we move on now?

Apple explained the move in a statement that said “Carriers do not all refer to their high speed networks with the same terminology, therefore we’ve decided to use “Wi-Fi + Cellular” as a simple term which describes all the high speed networks supported by the new iPad.  The advanced wireless features of the new iPad have not changed.”

It got into this mess though because it was happy to label its device as 4G, even though it’s only works as 4G in the US and Canada. While LTE/4G is edging ever closer in the UK, this new iPad won’t do the 4G thing – its frequencies are just not compatible. One would hope and suspect, that next year’s model will offer an integrated LTE chipset that is friendlier to European frequencies, but that is of course dependant on the progress made by the chipset providers, which in all likelihood means Qualcomm. By the time the next iPad comes out there should be a large addressable market across Europe for a multi frequency chipset to be produced in enough numbers to ensure economies of scale kick in. Bring it on.

iPad 3 still not 4G UK punters discover

Why does everything in the UK take so long? We have the worst trains, the slowest 3G and as we should know by now, no ‘4G’ of any kind at all – at the moment. We even take longer than everyone to complain. Yet, isn’t that what we’re good at? Let me explain.

Soon after the new iPad was released I pointed out that though it was heavily pushed by Apple as ‘4G’, the LTE frequencies supported meant that it would only work on ‘4G’ networks in the US and Canada.

A few days, and a lot of iPad sales later, some Australian purchasers of said new iPad realised this and when they realised they’d been sold a 4G pup got rather irate. (Australia does have a ‘4G’ LTE network with Telstra, but it operates at 1800MHz – the iPad + 4G does not). Cue throwing of iPad’s on barbies and hurling abuse via the Australian Competition and Consumer Commission (ACCC), actions that have led to refunds.

It’s taken quite a while, but the UK has finally woken up to the same fact, and as Rory Cellan-Jones, the BBC Technology journalist explains, the UK’s Advertising Standards Authority has also received some complaints. Only 40 of them though, which considering it sold three million in three days, doesn’t seem that many.

Of course, as the UK doesn’t have any live LTE ‘4G’ networks the issue isn’t as acute as in Australia, though in fact, as you can tell from this Which? conversation page, I was asked to contribute to, many UK punters thought that if Apple was selling a 4G iPad, there must be a 4G network.

At first I thought that this was as silly as the Ravenous Bugblatter Beast of Traal, who famously thought that if you can’t see it, it couldn’t see you.

Then again, that’s probably a bit harsh. For punters who don’t want, or don’t care to pay attention to the finer details of mobile broadband technology, it’s not an totally unreasonable assumption to make. (Clearly, Joe Bloggs should be paying more attention to the finer details of mobile broadband technology).

Even for those that do know that the UK doesn’t have LTE now, the information that it won’t support the UK’s LTE  when it comes online next year, comes very much as news to them.

It’s a problem.

As such, it seems that Apple has promised to remove all references to 4G from the UK website – though as it stands, they are still there.

It’s a 4G quagmire out there.

On the upside, it’s stopped raining here in London. It’s not all bad.

You call that 4G? This is 4G… – Apple offers refunds to peeved Australian iPad buyers

It seems that the confusion over the new iPads LTE compatibility that I discussed on its release day has peeved some Australians so much, that Apple is offering refunds to anyone who felt they were misled into buying a ‘4g iPad.

In fact, the Australian competition watchdog, the Australian Competition and Consumer Commission (ACCC), will actually be filing an application with the country’s Federal Court to seek, ““injunctions, pecuniary penalties, corrective advertising and refunds to consumers affected”.

Wow, those are some seriously peeved consumers.

So who is at fault? Apple is perfectly entitled to call the iPad with LTE the 4G iPad, but it’s clear that it needed to do a better job in communicating the small print that not all 4G is created equal. As it says on the iPad features page, “4G LTE is supported only on AT&T and Verizon networks in the US, and on Bell, Rogers and Telus networks in Canada.” The problem is that it’s in tiny writing down at the bottom that I imagine would be hard to spot even on the ‘resolutionary’ new iPad display.

It’s clearly even more of an issue in Australia at down under they have an actual commercial LTE network deployment from Telstra. However, this uses 1800MHz for its LTE, which is not supported by the iPad 4G, which operates on 700MHz and 2100MHZ LTE network only. It’s not hard then to imagine that many punters would have bought one specifically for its 4G compatibility, only to be disappointed when they realised they’d been ‘had’.

Apple would have done well to have made that clearer and to talk up its actually quite impressive 3G capabilities more. After all, the chipset inside supports HSPA+ and DC-HSDPA, which can reach some pretty impressive theoretical top speeds. HSPA+ is currently being rolled out across the UK by all the networks and though is somewhat patchwork at the moment by the end of the year is should be much more widespread so if you’ve bought an iPad 4g and are feeling glum about the lack of LTE, the don’t – you’ll still, to some extent, ‘get the benefit’ as my Grandma used to say.

As we in the industry know, these technologies are technically evolutions of 3G, but that hasn’t stopped them being marketed by AT&T and T-Mobile in the US at 4G. Then again everything is 4G in the US, LTE, DS-HSPA, HSPA+, WiMAX, and two cans and on some rural networks, two cans and a piece of string. (That is an actual FACT).

That said, if anyone does feel strongly about it in the UK, they can direct their ire at the Advertising Standards Authority (ASA). Not that I’m stirring or anything.

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Tilak Tejaswini, the global head of carrier services for Telstra International Singapore will be speaking at the LTE Asia summit in September, though if you can’t wait till then, the iPad 4G topic is sure to crop up at the LTE World Summit, taking place in May in sunny Barcelona.

iOS 5.1 magically boosts AT&T iPhones to 4G

iPhone users on AT&T that have upgraded to the iOS5.1 release will be delighted to note that the network icon at the top of the screen will now display ’4G’ rather than ’3G’, when it suitable coverage. Just like that. As upgrades go, that’s quite impressive. Yes, with a simple software upgrade, Apple has managed to upgrade the innards of every AT&T iPhone so that it now supports ‘true’ 4G speeds, which are 45,683 faster than standard 3G. Honest guvnor.

Of course, it’s not actually Apple’s fault, It’s AT&Ts, who clearly have told Apple that it wants everyone to think that its entire network is 4G, even though on an iPhone the fastest network it can connect to is HSDPA 14.4. So more FauxG that 4G.

As most will know, it all stems from the ITU’s capitulation last year in allowing anyone that has a network that offers, “a substantial level of improvement in performance and capabilities with respect to the initial third generation systems now deployed,” to call it a 4G network. When you consider that initial 3G networks offered data speeds of 384Kbps, that’s not saying much. The original requirement for 4G from the ITU was networks that could deliver 1GB/sec when stationary and 100Mb/s on the move. That’s not possible from LTE – that’s LTE Advanced, which is still a while away from commerical deployment anywhere in the world. 

But fret not. We have iOS 5.1, and AT&T. So that’s all right then.