Britain’s telecoms regulator was yesterday accused of showing “careless disregard” for customers after giving the owner of Orange and T-Mobile the go-ahead to roll out faster mobile internet services before its rivals.
Ofcom said Everything Everywhere (EE) – a joint venture between Deutsche Telekom and France Telecom – could use some its existing spectrum for 4G services this autumn, while rivals will have to wait until they can bid for new licences.
The regulator said its move would deliver “significant benefits” to customers and claimed there was no material risk that “those benefits will be outweighed by a distortion of competition”.
However, Vodafone said it was “frankly shocked” at the move, which it believed would distort competition by allowing one operator to run services “before the ground has been laid for a fully competitive 4G market”.
A spokesman said the timing was “particularly bizarre” given that EE is said to be in talks to sell some of its spectrum to Three, the rival network owned by Hong Kong-based conglomerate Hutchison Whampoa.
Three agreed that yesterday’s decision could make the market less competitive, and a spokesman said: “Further liberalisation without addressing competition issues could make that distortion worse.”
EE will be allowed to offer 4G services from 11 September, although the eventual timing will be a commercial decision for the company itself. It is the UK’s largest operator with around 27 million customers, and its network is also used by Virgin Mobile.
The company, which employs more than 15,000 people and operates around 720 stores across the UK, said it will launch a new brand later this year to sit alongside Orange and T-Mobile.
It is expected that 4G will offer download speeds up to ten times faster than the current 3G service, allowing users to download an album in as little as 60 seconds or a movie in ten minutes.
Thomas Wehmeier, principal analyst at Informa Telecoms & Media, said yesterday’s development was a “major milestone” for the UK mobile market.
However, he said a critical task will be to convince manufacturers to build smartphones for EE’s network, adding: “You can build the network, but without the right devices the customers cannot and will not come.”
Mobile equipment maker Ericsson estimates that only 5 per cent of the world’s population had access to a 4G network in 2011, but that is set to grow as new smartphones become available.
The UK has fallen behind the likes of Denmark South Korea, Sweden and the US in developing 4G networks. Last month the Czech Republic said it was looking to raise at least £225 million by auctioning off airwaves by the end of this year.
Ofcom’s auction, which is due to start later this year, will give access to the 4G network to at least 98 per cent of people across the UK.
While Ofcom has set a reserve price of £1.4 billion, analysts at PwC believe the UK government could raise as much as £4bn through selling off the airwaves. However, that would still be far short of the £22bn raised by the 3G auction 12 years ago at height of the technology boom.