No 4G for the Moment, but 2013 Promises Great Things for British Consumers

The sale of Britain’s 4G mobile spectrum just got a little bit more interesting today. Ofcom set out new proposals for making the airwaves available to the major network operators. They have claimed it includes measures to extend coverage to at least 98% of the UK population. Most strikingly today’s announcement on how the auction for the relevant spectrum will be handled provided room for a fourth bidder in the 4G network sales, most likely to be 3 Mobile.

Ofcom’s hand was essentially forced on this matter, as it knew that if it pressed ahead with the sale whilst only Everything Everywhere, Vodafone and O2 were ready then Three would end up taking them to court. It was going to get messy either way. Strangely, by delaying the auction, Ofcom might actually have chosen the quicker course to a 4G roll-out, as the complexities of Britain’s mobile industry would have taken an age to pick over in court.

As it stands, the auction will start on time at the end of the year, but bidding won’t start until 2013 and a chunk of the spectrum will be held back for this mysterious fourth bidder. All is well and good for the operators then. They all have time to prepare for the rollout, get their networks up to speed, and its guaranteed to be a level playing field as well. Sounds like good news for us consumers then, doesn’t it?

Well, not entirely. You see, the original 4G sales were meant to start two years ago. It has been exactly the threat of law suits that caused this two year delay. The process has been plagued by our idiosyncratic industry – the US and Australia will have had 4G coverage for the best part of a decade by the time Ofcom’s target of 98% coverage is reached in 2017. There has been infighting and bickering within and between the operators as they each try and get a head-start over each other. Everything Everywhere is still trying to get Ofcom to allow them to run a 4G service on their existing 1800MHz spectrum; something which Ofcom may yet allow.

The British consumer has suffered because of the oligopolistic nature of the mobile phone industry. The networks have already engaged in consolidation (as T Mobile and Orange merger to become Everything Everywhere shows) and the fact that there are so few sellers means there isn’t enough competition to incentivise rapid progress towards the next generation technologies. In the USA there is greater incentive to offer the fastest, newest next generation product – the UK market suffers from the fact that no firm can afford to be left behind, but is also big enough to block the others from advancing if it isn’t ready to advance itself. They have been striving to prevent others getting a competitive advantage rather than striving to gain that competitive advantage for themselves.

Arguably Everything Everywhere is the least guilty operator - it has shown more than enough willingness to progress with its existing spectrum. Unfortunately for consumers the advance to 4G has been held back by other networks that fear losing out. Ofcom is admittedly in a tricky position, which is why it should be commended for managing to find the shortest (or perhaps the less long) route out of this technological stagnation. Hopefully, the British consumer will be able to enjoy the fastest network speeds before too long.

From the consumer’s point of view 4G is a great thing. With 500% increases in mobile data usage expected by Ofcom between now and 2017, this is necessary to relieve the pressure that apps like Instagram, Facebook and Twitter are increasingly putting on the ageing network infrastructure. It will also put new pressure on the traditional landline ISPs. With 98% coverage and faster-than-broadband speeds on the 4G network, they will provide a real alternative to landline internet for a much of the non-urban parts of the country. Expect to see a shift away from landline in the future as a greater proportion of internet traffic is carried by the mobile operators. This should hopefully help to reduce prices for data packages in our tariffs as they seek to lure people away from traditional ISPs and as they have more bandwidth available.

The next five years look to be incredibly promising from our end. Faster, cheaper and more readily available internet access can’t fail to be a bad thing, can it now? It’s just a shame that we Brits have to wait so long for it as a result of that peculiar oligopoly we call the mobile phone industry.

I write about tech, gadgets and the mobile phone industry. When I’m not doing this for fun, I work for Store T Mobile.