Olaf Swantee, CEO at EE, on stage as the firm launched LTE services in London last year

EE, the first UK player to market with LTE, has announced that it has reached 318,000 LTE subscribers five months after launching the service.

The firm posted its 1Q13 financial results on Wednesday, which showed it generated £1.4bn over the quarter, 5.4 per cent less than it did for the same period last year,

EE also saw 166,000 new postpaid subscribers join its network in the quarter. This was 15,000 more than it added in 1Q12.

53 per cent of mobile customers are now on postpaid plans, compared with 49 per cent as of 1Q12. Postpaid plans deliver five times higher average revenue per user (ARPU) than prepaid, according to the firm. Underlying blended mobile ARPU also grew by 2.2 over the quarter, the firm added.

EE, still the only operator in the UK offering LTE services, added that it is on track to meet its targets, which include signing up one million 4G customers by the end of 2013. The firm is also aiming to sign up more than 1,600 medium and large enterprise LTE customers and to ensure that its LTE network reaches 70 per cent of the UK population by the end of the year.

“Today’s results are in-line with our expectations, and we are making good progress focusing on high value segments,” said Neal Milsom, CFO at EE. “We expect to strengthen our industry leadership position in the year ahead as the 4G roll out continues and we introduce double-speed 4GEE.”

EE’s CEO Olaf Swantee believes that Apple’s policy is good for the industry

UK operator EE has defended Apple’s policy of preventing mobile operators from offering the iPhone 5 as an LTE device until it has tested the performance of their LTE networks, claiming it is good for the industry. The operator launched its 4G network in September 2012, with the iPhone available at launch as an LTE-capable device.

Apple’s policy, which was first reported by Telecoms.com last year, has been criticised in some quarters as another worrying power shift towards device and OS players and away from operators. However, EE’s CEO Olaf Swantee believes that it is good for the industry and good for consumers.

“We work very closely with Apple and other manufacturers to ensure the device experience is right, because we agree with Apple,” he said. “You really need to make sure, as we move away from pure voice and text, that the mobile internet experience is good and solid.”

“We have seen many 4G operators that are not announcing the leading 4G handsets on their network because their 4G network does not support a good customer experience, so we absolutely support [Apple's policy],” he added.

When Telecoms.com asked Swantee whether EE would welcome other handset manufacturers, such as Samsung and HTC, taking a similarly aggressively approach to testing networks, he maintained that they must do so.

“Samsung and HTC are key partners of ours but you can’t just get a device that the manufacturer says is 4G ready and offer it as a 4G handset on your network. That’s why we are so surprised when we see some of our competitors claiming they have a 4G-ready device when they don’t even have a 4G network,” he said.

“It’s quite hard work – I have seen how many hours and how many engineers are required to make a 4G device work properly on a 4G network. This is not easy stuff.”

Swantee’s sentiments were echoed by Mansoor Hanif, director of network integration and LTE at EE.

“We find that a very positive step, because there are networks, and there are good networks,” he said. “So our hope is about differentiating our network on quality. Device manufacturers absolutely understand that now.”

The LTE World Summit, the premier 4G event for the telecoms industry, is taking place on the 24^th-26^th June 2013, at the Amsterdam RAI, Netherlands. Click here to download a flyer for the event.

EE said it will double the average speed 4G customers experience to more than 20Mbps, offer increased capacity on the network and boost headline speeds to 80Mbps

UK operator group EE announced Tuesday that it is doubling network speeds for all of its 4G LTE subscribers.

The firm gained permission from Ofcom to refarm its 1800MHz spectrum for LTE services in August 2012, allowing it to launch ahead of its rivals, which only secured LTE spectrum in the country’s 4G auction in February 2013. O2, Vodafone and 3UK are currently preparing their networks for launch.

Making the most of its competitive advantage, EE has now doubled the amount of 1800MHz spectrum bandwidth that it dedicates to LTE services — from 10MHz to 20MHz. This, the firm said, will double the average speed 4G customers experience to more than 20Mbps, offer increased capacity on the network and boost headline speeds to 80Mbps.

EE said that it made the decision to refarm more 1800MHz spectrum a while ago, but had been waiting for more users to connect to the network in order for it to be worthwhile. Today, one in four new consumer or SMB customers who join EE opt for the LTE service.

The operator has now set a target of reaching one million 4G subscribers by the end of 2013, which would represent around eight per cent of the EE pay monthly user base. It also forecasts that network traffic will increase by 750 per cent in next three years.

“Mobile users in the UK have a huge appetite for data-rich applications, and this will only grow as people become more familiar with and reliant upon next generation technologies and services,” said EE CEO Olaf Swantee.

“Our double speed 4G network will provide developers with the quality and speeds needed to develop the next wave of killer 4G apps. Whatever innovations they come up with, we’re ready.”

Despite the doubling in speed, however, the operator does not intend to increase its data caps.

“You will not get bill shock. Once you hit your limit, the data service will be stopped, and then you can choose to buy data add-ons,” added Swantee.

LTE speeds will be introduced in ten UK cities by summer: Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, London, Manchester and Sheffield. The network currently covers just over 50 per cent of the UK population in 50 cities across the nation.

Before the end of 2013, EE is also aiming to trial carrier aggregation to combine spectrum from different bands to boost performance and capacity, as preparations to launch LTE-A services begin.

The LTE World Summit, the premier 4G event for the telecoms industry, is taking place on the 24^th-26^th June 2013, at the Amsterdam RAI, Netherlands. Click here to download a flyer for the event.

BT and Vodafone have paid an additional fee to UK regulator Ofcom for preferred 4G spectrum

UK 4G spectrum licence winners BT and Vodafone have paid an additional fee to UK regulator Ofcom for preferred spectrum in the regulator’s final ‘assignment’ stage of the nation’s 4G auction. The final stage determines where each bidder’s holdings will sit in the radio spectrum.

Winning bidders of spectrum were given the opportunity to “top up” their bids, in order to reflect any preference they had over where in the frequency bands their new spectrum would be located, the regulator revealed.

Niche Spectrum Ventures – a subsidiary of BT – paid over £15m to be allocated the spectrum bands 2,520MHz to 2,535MHz and 2,640MHz to 2,655MHz.

Vodafone, which spent the most of all bidders to acquire spectrum, opted to pay more than £8m to be allocated the spectrum bands 801MHz to 811MHz and 842MHz to 852MHz. In addition, the operator paid a further £4m to be allocated the spectrum bands 2,500MHz to 2,520MHz and 2,620MHz to 2,640MHz.

EE and 3UK did not pay additional fees to dictate where their newly acquired spectrum sits, while O2 was not involved in the assignment stage. The spectrum it won carried an obligation to provide a mobile broadband to at least 98 per cent of the UK population. The winner of this lot was automatically allocated the spectrum bands 811MHz to 821MHz and 852MHz to 862MHz, in accordance with the auction regulations.

The total amount paid in the assignment stage was £27.1m.

The winning bidders have now been issued with licences to use the relevant spectrum holdings, and are now free to deploy 4G networks subject to the conditions of those licences, said Ofcom.

The UK’s four mobile network operators have secured LTE spectrum, along with BT subsidiary Niche Spectrum Ventures. O2 won the coverage obligation 800MHz lot, while EE secured its first sub-1GHZ spectrum. Vodafone got its hands on 85MHz worth of spectrum, including 25MHz of unpaired 2.6GHz spectrum. And 3UK’s newly acquired 10MHz of 800MHz spectrum means the operator has more than doubled its spectrum holding over the past 12 months.

Much of the discussion following regulator Ofcom’s announcement was around the revenue generated for the public purse. Just £2.34bn was raised; Chancellor George Osborne had hoped to secure £3.5bn from the auction.

“The disappointing revenues from the 4G auction are a reflection of the challenges that mobile operators face in growing revenues from their users in the social media age,” said Victor Basta, managing director of consultancy firm Magister Advisors.

Indeed the £2.34 figure is a far cry from what the government raised from the 3G auction in 2000 – a staggering £22bn. According to Jason Yeomans, Managing Director of PMGC Technology Group, the more modest figure raised this time around reflects determination from operators not to repeat their mistakes.

“I think all of the operators felt almost hard done by after [the 3G auction],” he said. “Lessons have been learned and the economy is a very different place now; the network operators have been subject to aggressive price reductions, not just from competition but from the regulator itself.  It’s not a bottomless pit.”

But revenue is not the most important aspect of the auction and Bengt Nordstrom, CEO at consultancy firm Northstream, warned that treating the auction as a missed opportunity for the UK treasury is extremely short-sighted. He believes that the less UK operators are forced to pay for spectrum, the more they are able to invest in building 4G networks and developing new services.

“The boost that 4G will contribute to UK GDP as a consequence will vastly outweigh the additional £1bn they might have raised during this auction,” he said.

Vodafone spent the most of all four mobile operators at the auction; a statement of intent to regain standing in its home market where it is now third-ranked player, according to Kester Mann, senior analyst for operators at research firm CCS Insight. He added that EE also did well in the auction and now has a balanced 4G portfolio at 800MHz, 1800MHz and 2.6GHz and 3UK won the frequencies reserved for a fourth player, as expected.

“BT will use its 2.6GHz frequencies for fixed wireless access. It will selectively target both rural communities, where deployment would be more cost-effective that using fibre, and high-density urban areas that need extra capacity,” Mann said. “But O2 failed to secure frequencies at 2.6GHz which may mean it struggles to meet growing data needs from its customers. This may have been partly due to BT’s strong presence in the auction.”

Now that the auction is all but over, Ofcom should be praised for its decision last year to allow EE to launch LTE using its existing spectrum, according to Matthew Howett, telecoms regulation analyst at Ovum.

“Despite much criticism at the time, the decision was the right one. Without it, we could very well still be arguing about how to design the auction rather than awaiting a host of additional 4G services in only a matter of months. Had it not intervened in the way it did, Britain could very well have been condemned to the slow lane for years to come,” he said.

And Dario Talmesio, principal analyst at Inform Telecoms & Media, believes that today’s announcement is proof that the UK is finally catching up with the rest of Europe.

“In fact, it is probably going to overtake most of the European countries as we will see one of the fastest 4G deployments ever, mainly driven by competition,” he said. “UK mobile operators paid much less than anticipated and every penny they saved on the auction will be gained by UK consumers in terms of better services.”

“The clear loser is the UK government, which now finds itself £1.1bn short of its rather optimistic predictions.”

Video will form a data tsunami, says EE

After the UK’s latest auction of spectrum for the delivery of 4G services fell short of Government revenue targets earlier today, successful bidder Everything Everywhere has warned that 2013 will be a critical year for operators to address the “mobile video tsunami” before it is too late.

Speaking to IP&TV News on Wednesday, Matt Stagg, Senior Manager of Network Strategy at Everything Everywhere (which was the second-highest bidder today, paying £588.9m for airways), was upbeat on the company’s prospects for building a mobile video ecosystem in the country.

“We have brought 4G to the UK, dragging the country from an industry laggard to a leadership position in just six months,” said Stagg. “From this position, EE will drive the development of an end-to-end mobile video ecosystem.”

The network strategist, who is speaking at the TV Connect 2013 event taking place in London this March, predicts that his company will achieve this in a number of ways, including looking at video separately from other Internet content, focusing on emerging mobile broadcast technologies, and supporting the progression in operator CDN federation.

Communications watchdog Ofcom currently predicts that 4G services will generate GB£ 20bn over the next decade.

The country’s four main mobile operators (Vodafone, EE, O2 and Orange) plus a division of BT paid £2.3bn ($3.5bn) in today’s auction – considerably lower than the £22.5bn paid in 2000 for 3G spectrum.

Stagg’s predictions can be read in full here.

If customer uptake was far ahead of expectation, then we would hear about it, says Ovum's Hartley

UK operator EE has posted a drop in revenue for 2012, despite being the only operator in the country to offer LTE services. The company formerly known as Everything Everywhere; created as a result of the merger of T-Mobile and Orange in the UK, saw full-year service revenue fall 2.6 per cent year on year to £5.95bn.

The operator admitted 2012 was a transformational year, in which it launched a new brand, a new network and purchased new retail estate. However, although it switched on its LTE network on October 30, 2012, it saw a 3.9 per cent year on year drop in revenue in the final quarter of the year.

The firm did see 752,000 net postpaid additions in 2012 though, with a net postpaid increase of 201,000 in Q4, as well as a 20 per cent year on year increase in postpaid renewals in H2.

“In the past year, we delivered solid financial performance, underpinned by good progress integrating the business and success in attracting high value customers,” said Olaf Swantee, CEO at EE.

According to Steven Hartley, principal analyst at research firm Ovum, EE’s latest results show that the company faces huge challenges.

“It is what the results don’t say that seems most telling,” he commented. “The lack of LTE customer numbers is unsurprising. The official line is so as not to impact the on-going spectrum auction. However, experience suggests that phrases such as “solid early 4G momentum” cover all manner of sins.”

He explained that if customer uptake was far ahead of expectation, then we would hear about it, and must therefore conclude that uptake has not been spectacular.

“That doesn’t make it a disaster, just not necessarily fully optimising its monopoly position,” added Hartley.

He said that EE announcing the fact that early Orange and T-Mobile customers migrating to 4G on EE are showing increases of approximately 10 per cent in ARPU highlights the premium that customers must pay to use LTE.

“We have argued for years that charging a premium for LTE services may appease investors fearful of telcos’ losing their traditional license to print money, but it will not generate customer uptake where 3G is well embedded,” said Hartley.

He pointed out that the three most penetrated LTE markets in the world – the US, South Korea and Japan – all have little or no 3G-4G premium. The business case for LTE is not about raising ARPU, he argues, as market saturation and competition will see to that – but data transport efficiency.

“EE’s premium is lower than many Western European operators, but it is a premium nonetheless,” said Hartley. “EE has everything in its favour for LTE to be a success: a market starved of high-speed mobile broadband, but high smartphone adoption and data usage; an LTE monopoly; rapid LTE coverage deployment; and a wider range of compatible handsets at launch than any other LTE operator.”

Therefore, unspectacular LTE uptake will be due to brand and pricing, he concluded.

“EE must not underestimate the importance of tariff strategy in seizing its first mover advantage.”

An EE spokesperson blamed the drop in service revenue on the impact of regulation, noting that service revenue would have actually increased by 2.7 per cent year-on-year excluding the impact of Mobile Termination Rate (MTR) cuts in the UK and roaming cuts across the EU.

“There is no other industry that would have five or six per cent shaved off its revenue in this way,” the spokesperson said,

We’re investing £1.5bn and still have to put up with these measures that would bankrupt most other industries. If we as an industry start to accept that, that’s unacceptable to those who want this industry to strive.“

Most notable was the special promotion that will give customers 500MB of LTE data, and the standard unlimited domestic calls and texts for £31/month over 24 months with a handset for less than £30. That’s cheap.

At the high end, consumers that EE profiles as “super users” can spend £46/month for 20GB of data with a SIM-only plan if they sign up before the end of next month.

EE says that these are time-limited special offers but price-cutting tends to be a one-way journey. Even if these tariffs do revert to more significant premiums, other offers will take their place. Especially when Vodafone, O2 and 3UK deploy their own offerings.

These players, along with EE, are currently stacking their chips on the green baize of Ofcom’s gambling table. You wonder what they make of EE’s announcement as they weigh their wallets. It’s not the most positive of messages about the prospects for LTE operators in the UK—EE only launched in November and the prices are already coming down.

Unfortunately, and unlike the 3G auction, this game is being played behind closed doors so we won’t know if EE’s retail re-jigs will affect any other player’s valuation on the spectrum until the process has concluded.

We can draw a few conclusions from EE’s pricing tactics, though. First, the firm knows that its LTE lead is running out fast and it wants to wring every advantage from it that it can. Second, money is tight and the market is price sensitive at the moment. Third, and most worrying for EE and its competitors, faster network speeds just aren’t enough of a draw for consumers in the immediate term.

Consider that EE is cutting its prices in the face of no comparable network offering from any of its competitors. We’re used to hearing about price cuts because of intense competition; price cuts in a monopoly are somewhat less common.

The reality, of course, is that EE’s LTE network has plenty of compeition, from the UK market’s 3G HSPA networks (EE’s own included).

Why should the end user pay even EE’s reduced rate of £31/month for 500MB of LTE data and a limited range of handsets when they can pay £26/month for 1GB of data at HSPA+ rates and get the Nexus 4 for free? This makes more sense financially to the consumer because consumers value the device more than they value the network.

Now this is bitterly unfair, because the network is the most complicated part of the mobile service and by far the most expensive to deploy and maintain. But it is a fact—and one that is unlikely to change any time soon.

Which is why operators need to be given as much flexibility as possible in their deployment of LTE networks. Ofcom is publicly committed to maintaining the number of separately owned and operated LTE networks in the UK market; it is one of the goals of this auction. And yet as our Telecoms.com Intelligence Industry Survey 2013 reveals, 65 per cent of respondents believe that network sharing is essential to the profitability of LTE. Not a useful tool to improve cost management, but essential to profitability.

New tarrifs and an MVNO have been added to EE's roster

UK operator EE, the Deutsche Telekom and France Télécom joint venture, has announced that a new MVNO will soon be running on its network. Phones 4u, an independent mobile retailer well-known on UK high streets, will launch LIFE Mobile in March.

The MVNO will initially offer just 3G and 2G services, but EE said it will bring 4G LTE to LIFE Mobile later in 2013. This will take the number of EE’s network partnerships to 25.

EE kick-started LTE in the UK in late October 2012, when it launched in 11 cities around the country. It currently has the national UK LTE market to itself but will face stiffer competition by the summer as its major rivals, Telefonica’s O2, Hutchison’s 3 brand and Vodafone and all likely to launch LTE following the spectrum auctions, which are scheduled to take place imminently.

In addition, EE has announced a promotional deal dropping the price of its entry-level plan from £36 to £31 a month, which offers a LTE ready handset for £29.99 on a 24-month plan with 500MB of mobile data.

The move has been noted as a response to widespread criticism of the price of the tariff for a relatively small amount data, but the deal is not permanent and will run from 31 January to 31 March.

It has also introduced a plan for ‘superusers’,offering 20GB of data for £61 a month on a 12-month SIM only-contract or with a handset for £76. There is also a promotional deal on this offering a £15 discount for those signing up before 28 February.

EE is also offering a new SIM-only plan offering 8GB of data for £41 a month.

EE, 3UK, O2, Vodafone, HKT, MLL Telecom and Niche Spectrum Ventures have all qualified to bid for the UK's 4G auction

Seven firms have qualified to bid in the UK’s 4G spectrum auction, including three new entrants. Joining EE, 3UK, O2 and Vodafone are HKT – a subsidiary of PCCW; MLL Telecom; and Niche Spectrum Ventures – a subsidiary of BT.

The companies will bid for spectrum in the 800MHz and 2.6GHz bands, the former band being part of the ‘digital dividend’ freed up when analogue terrestrial TV was switched off.

“The 4G auction will be a competitive process that will dictate the shape of the UK mobile phone market for the next decade and beyond,” said Ed Richards, Ofcom’s chief executive.

“New 4G services will stimulate investment, growth and innovation in the UK and deliver significant benefits to consumers in terms of better, faster and more reliable mobile broadband connections.”

PCCW is a Hong Kong-based firm which has fixed-line, broadband internet, TV and mobile business units. The firm operates in 16 markets globally. MLL Telecom is a UK firm specialising in designing, installing, managing and maintaining backhaul links and wide area networks. And UK incumbent BT formed Niche Spectrum Ventures in June 2012, although CEO Ian Livingston has previously said that the company has no plans to become a national mobile operator.

Earlier this week, the UK’s Ministry of Defence (MoD) announced that it too will auction off around 200MHz of the radio spectrum it owns. All of the spectrum is below 15GHz and will enable operators to beef up their LTE spectrum portfolio.