Faster, bigger and the future in UK

Current 3G or third generation technology is the widest available mobile option, but it has limitations and is soon to be overtaken, as Stephen Pritchard reports


The UK has one of the most fiercely competitive mobile phone markets in the world, but when it comes to the latest, high-speed broadband technology, it is by no means leading the pack. Only in the last few weeks have networks started to offer so-called “4G” phones and subscriptions, with the potential to rival fixed broadband connections.

Wrangles over a commercial auction for 4G licences and the need to clear radio spectrum used for analogue TV services, has delayed, and delayed again, the launch of 4G in the UK. In other countries – Japan, Korea, the United States and Germany – 4G services have been up and running for some time.

In the US, the network operator Sprint Nextel has offered its version of 4G since 2008. Here, the first commercial 4G service, operated by EE, which also owns the Orange and T-Mobile brands, only started at the end of October.

“We’ve had a number of false starts [with 4G] particularly in the UK,” says Paul Beastall, a mobile communications expert at PA Consulting Group. “But the launch of a commercial service by EE means Ofcom’s spectrum auction has to run on time. In other countries, there was a rush to launch services, but now the technology is mature enough and operators need it to meet demand for broadband services. There is both regulatory push and market pull.”

So far though, that demand can only be met by EE. Customers of Vodafone, O2 and 3 will need to wait until around May 2013 for 4G, as the networks will need to win spectrum in the forthcoming Ofcom auction, now slated for January, and then ramp up their services. EE has been able to gain a head start by using some of its existing spectrum – the radio waves used to carry the 4G signals – but for technical reasons, other operators do not yet have enough spectrum to follow suit.

“The issue is we don’t see 4G as critical national infrastructure, but something that would be nice for surfing the web or watching YouTube,” says Chris Gabriel, head of strategy and services at Logicalis, an IT services firm. “But if you want big data or video collaboration, we are competing with nations such as South Korea. It is broadband and 4G that pushes them forward.”

The key thing is 4G will make people more productive when they are out and about

This also means that EE has launched its new services at something of a premium; its tariffs are mostly dearer than either Orange or T-Mobile packages, or include a smaller data allowance. And eager consumers need to buy a new, top-of-the-range handset, such as Apple’s iPhone 5 or Samsung’s Galaxy S III. EE justifies the cost, in part, because of the levels of investment needed for 4G, with the company saying it is spending £1 million a day on improvements.

Analysts do expect 4G prices to fall as other companies enter the fray, but point out that for now 4G is something of a luxury service, which might justify a premium price.

“Everybody who has used a smartphone on 3G realises that it can be a pretty painful experience, whether it’s uploading a picture to Facebook or using an enterprise application,” says Matthew Howett, a telecoms expert at analyst firm Ovum. “But 4G is starting off at around five times faster [than 3G] but will be eight to ten times faster. The key thing is it will make people more productive when they are out and about. It will be the same [internet] experience as you have in the office.”

But whether businesses will rush to sign up for EE’s admittedly slick service or for its rivals’ remains to be seen. High-profile and expensive advertising campaigns, featuring Kevin Bacon, are more likely to appeal to consumers with some cash to spare, and the desire to watch YouTube videos, iPlayer or Sky TV on the move, than to hard-bitten chief information officers who are under pressure to control their companies’ IT and telecoms costs. For IT directors, coverage and reliability may be higher up the wish list than raw speed.

“4G may appeal to some knowledge workers or people doing interactive work, or to enterprises wanting a better experience for their customers,” says Sylvain Fabre, a research director at Gartner. “But 4G can’t be used [by companies] for critical applications, because it’s not available everywhere.”

Unsurprisingly, EE is more bullish. “Customers are saying they’re increasingly using cloud-based services [IT services accessed over the internet] and they have these fantastic smartphones,” says Martin Stiven, EE’s vice president of business. “4G is the final part of the jigsaw. Speed equals better productivity, less travel and a better experience.” 

ANALYSIS

4G or not 4G?

Pros

It’s fast: speeds of between eight and twelve megabits per second (mbps), according to EE, or around five times the speed of 3G. Those speeds will increase to 20mbps and more with upgrades and network fine tuning.

More capacity: 4G is more efficient in the way it uses radio waves, so there should be more capacity, for more users as the networks are built out.

It could be cheaper: 4G may attract a premium now but, as a more modern technology, it has the potential to be cheaper to run than 3G, so prices could fall.

Less delay: 4G has less latency than other mobile data networks, making it more suitable to voice, video or other streaming services.

Cons

Cost: 4G costs more than 3G, for now, and it could be a year or more before the market is truly competitive.

You need a new phone: unless you bought your phone very recently and it’s top-of-the-range, it is unlikely to work.

Coverage: 4G is not even close to everywhere. In the big cities it’s fine, everywhere else be prepared to use 3G or even slower connections.

It hogs data: making it quick to download means people will download more. Watch out for employees downloading music and movies, but also consider the impact, and cost, of sharing huge work files on both mobile bills and company network.