Ofcom claimed that mobile operators will not be able to roll out LTE until 2013

Mobile network operators will not be able to roll out 4G LTE services until 2013 at the earliest, due to technical issues, according to UK regulatory body Ofcom, rendering speculation about whether the spectrum auction will be delayed as irrelevant.

The regulator has altered its forecast for the timing of the auction from 1Q12 to the “first half of 2012”, whilst admitting that it could yet happen in the first quarter of the year.

“It is a very complex programme with a number of different parts and processes and all of them have to happen at the same time, which makes it difficult to judge at this point when the auction will take place,” said an Ofcom spokesperson.

“We don’t want to say that it will definitely happen in the first quarter, but it might. It will happen in the first half though, and we’ve actually told operators this over the past three or four months.”

The spokesperson added that the UK’s mobile operators would not be ready to roll out the service until 2013 anyway as spectrum needs to be made available, and there are currently stumbling blocks in place.

Part of the 800MHz spectrum that is required for 4G is currently being occupied by digital terrestrial television and there are issues with 4G interfering with neighbouring bands, which need to be mitigated. Until these issues are resolved, operators will not be able to use the spectrum, and the earliest would happen is in 2013. Therefore, Ofcom argues that any issues with the timing of the auction will have no impact on operators’ plans.

The spokesperson added that speculation that the delay was caused by legal threats from mobile operators is “not true at all”. Everything Everywhere, Vodafone and O2 have each recently denied that they had attempted to delay the auction.

New Ofcom rules mean UK networks can now plays swapsies with their spectrum

UK regulator Ofcom, has announced that, from June 20th, mobile operators are permitted to trade the rights to spectrum amongst themselves. The new regulation covers 900MHz, 1800MHz and 2100MHz spectrum and mean operators will be able to bid for the use of spectrum they believe the have greater need for than other operators.

“By allowing operators to trade their spectrum, Ofcom believes that there will be greater opportunity to use it more efficiently. Ultimately, it is believed that this will bring benefits to citizens and consumers in terms of improved mobile services,” the regulator said in a statement.

The UK government directed Ofcom to make the move in December 2010 in a bid to improve competition in mobile services, and Ofcom started the consultation process in February 2011.

Auctions for UK LTE spectrum derived from the sought after 800MHz digital dividend will take place in 2012, with roll-out’s expected in 2013.

O2, the UK arm of Telefonica, recently objected to the plans, complaining the requirement for caps on potential spectrum band acquisitions was illegal under European law. The operator was more enthusiast about today’s spectrum trading news however stating simply that, “O2 welcomes the announcement made today by Ofcom that it has given the go-ahead for mobile phone operators to trade the rights to the radio spectrum they hold.”

Fifth-placed 3, part of the Hutchinson Whampoa group, was less enthusiastic however, stating:”Spectrum is the lifeblood of smartphones and the mobile internet and for those with surplus holdings it is also a strategic asset, so voluntary trading is the exception. This move simply allows those who have been gifted access to public spectrum to profit from it, with no benefit for UK taxpayers. Ofcom’s ambition to deliver faster and more capable services to consumers is best served by a truly competitive allocation of this public asset.”

O2 believes that Ofcom's UK LTE spectrum auction is illegal under EU law

The UK arm of Telefónica, O2, has released a statement blasting UK regulator Ofcom’s consultation over the forthcoming digital dividend spectrum auction.

The operator is objecting to the use of spectrum floors, whereby at least four operators will get at least 10MHz of spectrum below 1GHz.  However, O2 believes that these spectrum floors amount to a state aid, which would make them illegal under EU law.

“We believe that the proposed spectrum floors are a state aid and are therefore illegal under EU law,” the carrier said in a statement.

The use of spectrum floors would prevent it from gaining as much 800MHz spectrum as it would like. This is because Ofcom views O2 and Vodafone to have an advantage by already owning 900MHz spectrum. Sub 1GHz spectrum is more valuable as lower frequencies provide greater range and superior in-building penetration than higher ones.

“The proposed floors, and the argument that Vodafone and ourselves already have enough sub-1GHz spectrum, are based on the mistaken belief that 800 MHz and 900 MHz are directly comparable spectrums. They are not. Our response to Ofcom clearly explains why.

“Ultimately this auction is about new, next generation services. It is not about 2G and 3G, but about the future. It should therefore be used as an opportunity to provide fair, open and equal access to newly.”

O2 also said that limiting the amount of 800MHz spectrum to purchase will reduce its potential value. “Ofcom’s own figures suggest this effect could cost taxpayers £1bn,” it said.

The operator was also frank in its belief that Ofcom should rethink its whole approach. “While we support the proposed auction structure and spectrum caps, Ofcom is faced with a difficult choice of either revisiting its spectrum floors proposal or discarding the floors and getting on with the process.”

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The O2 arena in London

UK mobile broadband users accessing the web over dongles and datacards are getting average throughput of 1.5Mbit/s, according to research released Thursday by UK regulator Ofcom. But there were significant differences between the five carriers’ performance, with O2 delivering the best performance, and Orange the worst. 3UK outperformed T-Mobile, with which it shares a 3G network.

A panel of more than 1,000 consumers had software installed on their laptops by network measurement specialist Epitiro, which carried out the research on behalf of Ofcom. It was this software that yielded the 1.5Mbit/s average speed. Epitiro also set up static test instruments to mimic dongle-connected laptops in 97 UK locations in a bid to measure the networks’ performance under ideal conditions.

This element of the study, which measured the networks at points where the coverage was very good, showed higher performances. Average speed rose to 2.1Mbits/s, with O2 nearing 3Mbits/s. Overall more than 4.2 million tests were carried out across the five network operators. As well as delivering the fastest throughput, O2 also offered the lowest latency of the five carriers.

Orange and T-Mobile, recently brought together to form Everything Everywhere, were the worst performing of the five UK operators. The consumer panel research ranked the operators in the same positions as the static probe tests, according to Iain Wood, EVP marketing and product development at Epitiro.

Wood told Telecoms.com that the latency is a bigger issue for operators than the throughput they deliver. A real world average of 1.5Mbit/s is adequate for the web surfing that typifies most UK mobile broadband usage, but the latency, which Wood said averaged around 100 milliseconds, would “hamper responsive web surfing and prevent the watching of videos, online gaming and possibly VoIP usage.”

While the results will give O2, which in 2009 had to apologise to users for the poor performance of its network, some positive marketing collateral, Everything Everywhere will be smarting. In particular T-Mobile, where some executives are known to have voiced concerns over the merger of its 3G network with 3UK, will be galled to see its sharing partner outperforming it in such a study.

Ofcom’s research, which is the first study into mobile broadband speeds the regulator has published, also found that 17 per cent of UK households use mobile broadband. Furthermore, seven per cent are using it as their sole means of internet access, up from three per cent in 2009. The regulator said that it plans to carry out a similar study for smartphone use in the future.

The deal is the first instance of network sharing in Ireland

The second and third-placed mobile operators in the Irish market, incumbent Eircom and Telefonica’s O2, have announced that they are to share networks in a deal that Eircom described as the first of its kind in Ireland. Eircom said that the deal will “result in an unrivalled mobile experience for customers” as the two carriers seek to meet growing demand for high bandwidth services.

The firms said they plan to collaborate on areas such as power supply and site equipment as well as transmission sharing. Existing sites will be consolidated where possible, they said, and new sites jointly built. But the carriers were at pains to point out that the deal did not herald any more formal consolidation.

“While O2 and eircom will work closely together, there is no transfer of assets and spectrum will not be shared under the new arrangement. All mobile operations supported by O2 (O2 and Tesco Mobile) and eircom Group (Meteor and eMobile) will continue to compete with each other, ensuring that customer choice in the market is maintained, “ Eircom said in a statement.

With the Irish economy in dire straits, cost cutting strategies such as network sharing are likely to be crucial for the nation’s operators. The two carriers did not reveal the scope of the savings they expect to reap from the new initiative.

Eircom sits in third place in the Irish mobile market, closing out 2010 with 1.05 million customers, according to Informa’s WCIS. O2 sat second, with 1.66 million customers, while Vodafone led the market with 2.22 million. In fourth place, 3 Ireland has seen its customer base decline over the last year and had just 300,000 subscribers at end December 2010. While Eircom and O2 ruled out any amalgamation at the ownership level, it seems unlikely that Ireland, a nation in financial trouble, with only 4.5 million inhabitants, will be able to sustain four mobile operators.

O2 has launched its 3G900 network in the UK

O2 has staked its claim to be the first UK operator to switch on a 3G network over 900MHz spectrum in London. Taking advantage of recent licensing changes, this latest rollout in London follows on the heels of similar deployments in Birmingham, Leeds and Manchester; the London deployment is expected to deliver a 50 per cent increase in capacity and a 30 per cent increase in speed.

The UMTS900 spectrum was made available in January, when UK regulator Ofcom granted operators permission to use the previously 2G-only 900MHz band to deploy 3G services. This “refarming” policy is intended to increase mobile broadband rollout, but has attracted controversy thanks to the inconsistent way in which spectrum has been allocated in the UK in recent years. Everything Everywhere (the product of a merger between Orange and T-Mobile in the UK), for example, has no 2G spectrum in the 900MHz band and initially objected to what it saw as an unfair gifting of newly-valuable 3G spectrum to competitors Vodafone and O2 by the regulator.

Everything Everywhere dropped its legal bid to prevent the changes last year, but has since called on Ofcom to cap the amount of low-frequency LTE real-estate any one telco can own. The UK’s smallest operator, 3, has joined calls for caps. CEO Kevin Russell said that Ofcom’s failure to offer all operators a fair crack of the spectrum whip will drive smaller operators out of the market and cause price increases for end users. Russell told delegates at a London policy debate this week that, in markets where a smaller newcomer had survived, calls cost 19 per cent less and data costs were 28 per cent below that average in less competitive markets. Russell added that 97 per cent of traffic on 3 UK’s networks was data and that the firm sells more iPhones than any other operator; with no 2G spectrum to convert, it’s easy to see why the smaller player feels it’s in danger of being squeezed out of the market. In other countries such as Ireland, France and Germany, 3G900 spectrum was parcelled up and sold to a broad spread of operators in an effort to ensure competition.

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O2 UK will provide M2M technology to connect smart meters across the UK

Telefónica’s UK operation, O2, on Wednesday struck a deal with security and smart metering firm G4S to deploy a remote management and monitoring system for a national smart meter network.

In a multi-million pound deal over three years, O2 UK will provide (machine to machine) M2M technology, including around 200,000 SIM cards, to connect smart meters across the UK to G4S’ data centre. G4S will use O2’s SMS gateway to relay information from its smart meters to its data centre and back again, while outbound messaging will allow G4S to monitor the working order of its smart meters remotely, reducing the cost of maintenance and servicing as well as carbon emissions associated with travel.

The deal marks O2’s first foray into the smart metering market and follows G4S’ recent announcement that it has signed a three year contract with British Gas Business to deliver end-to-end smart gas and electricity metering services in Wales, the Midlands and the South of England.

Connected Home World Summit, 28 – 29 June, Grand Connaught Rooms. London, www.the-connected-home.com/

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3UK Kevin Russell has called for caps in next year's spectrum auction

The UK’s smallest operator, 3UK, is urging national regulator Ofcom to impose caps on spectrum allocation below 1GHz of bandwidth in order to prevent it from being squeezed out of the market.

In an interview with the Financial Times, CEO Kevin Russell said that 3 UK ran the risk of being pushed out of the market if it was unable to secure LTE spectrum in next year’s auction. The auction, due to be held in the first quarter of 2012, will be for 800MHz and 2.6GHz. With 3’s largest rivals Vodafone and O2 already owning 900MHZ of bandwidth, the smaller operator is calling for a cap similar to that imposed by German regulator Bundesnetzagentur during its auction last year.

Russell told the FT that “there is a risk of a strategic premium being bid to squeeze 3 out of the marketplace. If 3 is blocked out of spectrum…there will be consolidation in the marketplace.” Earlier this year, Russell criticised Ofcom’s decision to allow competitors to reallocate spectrum from basic 2G services to 3G offerings.

3UK recently bucked mobile data pricing trends with the announcement that it would continue to offer unlimited data plans to prepaid users, starting at £15 a month. Globally, almost all the major operators have moved away from all-you-can-eat offerings in search of new billing models designed to cope with a significant surge in mobile data uptake.

With a small subscriber base, 3UK has the capacity to spare, while its competitors are dealing with congestion issues that are, in some cases, very serious. The larger carriers have argued forcefully that unlimited data use is economically unsustainable but 3UK appears to have no such concerns. With the UK market looking like its settling into a three-way fight between the bigger players, how easy it will be for 3UK to keep a toehold remains to be seen.

The seventh annual LTE World Summit takes place in Amsterdam on 17th – 18th May.

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Sky said it would use the acquisition to support its mobile activities

Perhaps traffic offload is not the only motivation for O2 UK to roll out its own wifi network. On Thursday British broadcaster BSkyB confirmed its acquisition of the Cloud, giving the firm ownership of over 5,000 public wifi locations across the UK and one of O2’s wifi partners. While it does not operate a mobile network, Sky, in some respects is a competing service provider, especially when it comes to content.

Sky said it would use the acquisition to support its mobile activities, allowing users of Sky Anywhere to access to Sky content on multiple devices. Sky also has a fixed line offering, unbundling broadband from BT and said it would use wifi to complement its existing broadband services with connectivity while they are on the move.

An O2 spokesman said the onus for its initiative would be on the partnerships it would form directly with venue owners. “We recognise that this business model will enable us to create a number of strategic venue partnerships, of benefit to O2 and our also our customer base. From the point of view of our venue partners, the strength of the relationships lies on the fact that O2 Wifi will be open to everyone, not just O2 customers,” O2 said.

Perhaps the key here is the carrier’s scope for integrating O2 Wifi with the capabilities afforded by its advertising network O2 Media and pre-pay cash card offering O2 Money “to offer the potential to deliver relevant timely content that customers want in a format that suits them.”

Giving away free wifi access to all comers would give O2 the opportunity to directly harvest lots of customer data, which it could then use to better target its advertising. And with mobile payments, especially those of the NFC variety, looming large on the operator agenda right now, having a mobile money strategy in place makes sense too. As Ronan Dunne, O2 UK’s chief executive, said at the launch of O2 Money in 2009, it’s a move that fits in with the company’s strategy of the ‘mobile wallet’. “We believe that we are at the start of a journey towards the coming together of phone and wallet and we intend, through O2 Money, to be at the forefront of this trend. This launch represents an important step towards O2 becoming a leading service provider with mobile at its core.”