Everything Everywhere's bid to launch 4G services in the UK later this year has created quite a stir, with rival operators O2, Vodafone and Three claiming that the move could damage competition in the market. But is the proposal a real threat to competition or just big fuss about nothing?
Everything Everywhere (the combined entity of Orange and T-Mobile) holds a large portion of spectrum at 1800MHz – currently used for 2G. The company hopes to steal a march on other operators by refarming this spectrum for 4G services, ahead of Ofcom's auction of spectrum in the 800MHz and 2.6GHz bands later this year.
Ofcom gave its provisional approval for Everything Everywhere to deliver 4G services over its existing 1800MHz spectrum in March, stating that the refarming of spectrum would “bring material benefits to consumers”.
However, the watchdog has been forced to extend its consultation period amid a storm of protest from rival networks, none of whom hold sufficient quantities of 1800MHz spectrum to launch their own 4G services in any compelling way.
O2 said that Ofcom's proposal was “contradictory to its objective of delivering a competitive market environment,” Vodafone accused Ofcom of “taking leave of its senses,” and Three threatened to take legal action against Ofcom, citing concerns that it may be squeezed out of the market.
The deadline for responses to Ofcom's consultation is Tuesday 8 May.
Where are we now?
It is understandable that operators are concerned about being left behind in the race to launch 4G services. LTE and WiMAX are expected to provide faster mobile broadband and greater capacity than existing 3G services, and have been touted as a solution to rural broadband scarcity.
The majority of spectrum belonging to Vodafone and O2 is in the 900MHz band, which was originally earmarked for the delivery of 2G GSM services; Everything Everywhere currently delivers 2G in the 1800MHz band.
In 2000, all of the existing operators were also allocated a chunk of spectrum at 2.1GHz to deliver 3G services. Three, which was founded in 2002, only holds spectrum at 2.1GHz.
Over the years, regulators have relaxed how the spectrum bands can be used, and last year O2 became the first UK operator to deploy 3G services in the 900MHz band, using HSPA. The advantage of lower frequencies is that they can travel further and penetrate deeper into buildings, whereas higher frequencies have greater capacity.
While Everything Everywhere's plan to deploy 4G at 1800MHz is certainly viable – there are currently 16 operators around the world offering commercial LTE services in this band – the issue is around competition.
Most countries in Europe have already auctioned off spectrum in the 800MHz and 2.6GHz bands, which have been formally ratified for 4G use, meaning that deployments at 1800MHz pose little threat to market competition.
However, the 4G spectrum auction in the UK, originally planned for September 2008, has suffered repeated setbacks, and is now scheduled for the last quarter of 2012, meaning that most operators will not be able provide 4G services in these bands until 2014.