iPhone 5 launch piles 4G pressure back on Ofcom

Summary:The launch of the iPhone 5 will be a competitive advantage for EE when it launches the UK's first 4G network in the coming months. Ofcom will feel the pressure to appease EE's competitors or face further litigation over how spectrum is doled out.

The launch of the iPhone 5 on Wednesday confirmed the most likely of suspicions — it will work on EE's new 4G network when it goes live later in the year.

iPhone 5
The 4G-equipped iPhone is coming to EE in the UK - giving it a huge competitive advantage. Image: James Martin/CNET News

But the release highlights an oversight in Ofcom's decision to allow EE to liberalise its spectrum for 4G services ahead of the 800MHz and 2.6GHz auction planned for later in 2012.

Prior to the liberalisation decision rival operators complained loudly that if Ofcom let EE go ahead and re-use the spectrum for 4G, it would give it a competitive advantage, as it would allow it to offer the services significantly earlier than they could.

While Ofcom ultimately decided that the possibility of creating a 4G monopoly for up to a year was not a significant concern, in doing so it seems it overlooked the realities of the mobile market.

Where the UK stands on 4G

Currently in the UK there is no widespread 4G service, but before the end of the year EE plans to have a network that will cover 20 million people . This 4G LTE network operates in the 1800MHz band,  one of the frequencies supported by the iPhone 5 .

Now, while EE isn't the only network to own 1800MHz spectrum, the amount that O2 and Vodafone has is so small that it can't realistically move 2G/3G services using that band to other bands in order to create a big enough block for 4G services in 1800MHz. The majority of O2 and Vodafone's spectrum currently sits in the 900MHz and 2.1GHz blocks, again, currently used to deliver its 2G and 3G services.

Similarly, Three has a chunk of spectrum in the 2.1GHz band and has agreed to buy two 15MHz blocks in the 1800MHz band from Everything Everywhere, but it can't use them for 4G services until September 2013 unless EE gives it permission.

So, while many of the operators own chunks in each band, for various reasons (such as how effectively each performs and how much is required for decent throughput) they aren't really appropriate for 4G in the UK.

"EE will likely retain this [2.1GHz] spectrum for UMTS. O2 has their relatively new 3G DC-HSDPA+ network on this band so will be unlikely to want to refarm it. Vodafone and Three, possibly — but not until a process has been gone through, and the band is not all that attractive to begin with," Morgan Mullooly, spectrum research analyst at Analysys Mason told ZDNet on Thursday.

EE's head start

Before the end of the year, an auction will take place of spectrum in the 800MHz and 2.6GHz bands, both of which will be used for 4G services in the future. However, given that the auction has still not taken place despite four years of negotiations, and that further threats of litigation could still theoretically delay it further, EE's head start in offering 4G services is undeniable.

iPhone 5
EE has the 4G-ready iPhone 5. Was Ofcom right to liberalise the 1800MHz band? Image: EE

EE has another huge competitive advantage: when its 4G service goes live, it will be offering the Samsung Galaxy SIII LTE (the non-LTE version is one of the best-selling Android phones of all time), the iPhone 5 (for which there will clearly be huge demand), and Nokia's new Windows Phone 8-based Lumia 920. All these factors taken together, it is undeniable that EE has a monopoly on both the spectrum and UK LTE-ready devices.

Moreover, EE will have this competitive advantage over other networks for up to a year.

Think about it: you're due an upgrade and are looking for a new handset. Would you get the 3G version of the Samsung Galaxy S III or iPhone 5, if you could get the same thing but with five times faster data speeds? It seems unlikely.

"Ofcom are surely coming to realise the folly of their indecent haste to allow Everything Everywhere to refarm their 1800MHz spectrum. Not only will EE get the jump on their competitors, but 1800MHz is a fantastic spectrum band as it offers a great compromise between coverage and capacity," Mullooly said. "And now, they will be the only carrier in the UK to support the LTE capabilities of the iPhone 5."

Hardware wiring

Of course, ultimately other operators will have their own networks up and running in the 800MHz and 2.6GHz bands (with the exception of Three, which could launch one on 1800MHz, or if it really wanted, on 2.1GHz), but due to the way in which radio hardware works the devices will need to be specially enabled to work for 4G services on these frequencies.

"Ofcom are surely coming to realise the folly of their indecent haste to allow Everything Everywhere to refarm their 1800MHz spectrum" — Morgan Mullooly, Analysys Mason

For example, the iPhone 5 will work on EE's 1800MHz network, but it won't work on any of the other UK 4G LTE networks that use the 800MHz and 2.6GHz bands when they go live. The same will be true of other handsets launched between now and the establishment of a competitive market sometime next year. So, essentially, even though other operators can offer the iPhone 5 hardware, none except EE (or Three, theoretically, one year from now) will support its 4G functions, making it an effective exclusive.

"I don't think that Ofcom could have predicted that Apple's LTE iPhone would have gravitated towards these particular spectrum bands [850/1800/2100MHz]. The 800MHz and 2600MHz bands are available or are being made available in most European markets and it is surprising that Apple chose not to support those bands, which would have given it maximum reach," Mullooly said.

Ofcom has now officially liberalised the 1800MHz band, but ZDNet understands that the window for other operators to lodge a formal complaint about the decision has not passed. Quite how the best handsets running on the fastest data network for a year longer than competitors doesn't create a competitive advantage for EE remains to be seen, but I'd be surprised if this was the end of the story for the UK's 4G rollout.

Topics: 4G, iPhone, Mobility, Telcos

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With a psychology degree under his belt, Ben set off on a four-year sojourn as a professional online poker player, but as the draw of the gambling life began to wane his attentions turned to more wholesome employment.With several years' experience covering everything in the world of telecoms and mobility, Ben's your man if it involves a s... Full Bio

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