Readying the UK for 4G Competition

(Jul 30 2012) 4G , LTE , Spectrum

1. The 2012 Olympic Games are underway in London and the UK is welcoming visitors and competitors from around the world.  Venues have been constructed and infrastructures improved, all with the goal of facilitating a welcoming, accessible and safe environment for competition; a Herculean task to say the least.  And in some ways, just like the Olympics, readying for 4G competition in the UK has also been no easy task.

   While the UK’s regulator, Ofcom, has just recently announced a 4G spectrum auction, the irony of the delay in opening 4G markets has already emerged during the 2012 Olympics.  TV broadcasters covering a cycling event met with challenges in receiving updates from the competitors GPS units.  The problem?  Too many mobile users at the venue and too little bandwidth meant that updates were delayed or lost.  Although too late for this year’s Olympics, the underlying problem is about to be addressed.

   Ofcom originally planned to undertake a spectrum auction back in early 2008.  The regulator later declared that it would delay the auction to allow UK operators to get a better sense of the market demands for 4G.  The delay was thoughtful and addressed the concerns that operators had overpaid for 3G licenses in the earlier 2000 auction.  At the time user migration to and adoption of 3G materialized much slower than originally anticipated and in the end that meant operators were paying for spectrum they weren’t using.

   But times have changed.  The demand for 4G in the UK is real and operators are now facing a wait until at least the latter part of 2013 before they’ll be able to roll-out 4G services.  Aside from the auction process itself, another of the hurdles that needs to be overcome is the completion of the broadcast TV analog to digital migration that is necessary to free up available 4G spectrum.  Upon completion of the migration and auction it is expected that network deployments will provide 98% of the UK with indoor access to 4G by the end of 2017.

   While access to spectrum may be delaying 4G service deployment in the UK, smartphone usage is already on the rise.  A survey commissioned by Google last year identified that from UK smartphone usage grew from 30 to 45% during the period of January to October 2011.  The growth rate outpaced the markets of the US, Germany, Japan and France. 

   Even with demand in place and spectrum cleared, Ofcom will have its hands full with the auction.  The regulator has stated that it intends to allow for “at least four credible national wholesalers of 4G mobile services.”  Currently the UK wireless markets are served by operators Vodafone, O2, Everything Everywhere (the 2010 merger of Orange and T-Mobile) and 3 UK. 

   What is notable is that Ofcom did not specifically identify 3 UK, the smallest of the lot, as being the fourth operator.  "This could be either Hutchison 3G (3 UK) or a new entrant altogether," stated Ofcom . While 3 UK is viewed by most as a likely beneficiary it would appear clear that new players shouldn’t be ruled out.  And the possibility of a new players emerging could increase if 3 UK is successful in its pursuit of 1800 MHz allocations being sold off by Everything Everywhere.  Potential new entrants could include BT, BSkyB , TalkTalk or Virgin Media.

   One of Ofcom’s stated goals in the combinatorial clock-based auction is to ensure equality for operators who need access to 4G LTE spectrum.  Another objective the regulator wants to facilitate is healthy competition, to keep prices low.  To do this Ofcom has gone to great lengths to put in place rules that are not only fair but also ones that will withstand legal challenges by the operators. 

   And given that each of the four operators has engaged Ofcom in legal battles in the past, it isn’t all that surprising.  “We are fully prepared for litigation and we are fully prepared to defend the decisions we have taken today," explained Ed Richards, Chief Executive of Ofcom.

   The bidding process is expected to begin in early 2013 and will include licenses for 800 and 2600 MHz.  Assuming that prospective bidders or existing operators don’t present any form of legal challenge to the auction the UK could see its first 4G roll-outs taking place in the Fall of 2013.

   Highly constrained and fragmented, access to suitable and harmonized spectrum is critical to the success of 4G networks.  At 4G World’s Spectrum Summit (October 29, 2012) government officials and industry leaders will debate the best methods to relieve the global spectrum crunch.  Join the experts as they review the options and plot the courses for 4G operators.

   By: Andy Mitchell, Editor, 4G Trends

   Bookmark or Share this article

Login to comment