--Ofcom gives Everything Everywhere the nod to provide 4G
services
--Decision gives mobile operator a head start over rivals
--Three UK buys spectrum from Everything Everywhere as part of
its 4G plans
(Adds details on Three UK buying spectrum from Everything
Everywhere in 14th graf.)
By Lilly Vitorovich
LONDON--The U.K. will have superfast mobile Internet access by
the end of this year after communications regulator Ofcom gave the
nation's No. 1 mobile operator Everything Everywhere the green
light to use its existing network to provide faster speeds.
The decision gives Everything Everywhere--the U.K. joint venture
of Deutsche Telekom AG (DTE.XE) and France Telecom (FTE)--a good
six months headstart over rivals like Vodafone Group PLC (VOD.LN),
Telefonica SA's (TEF) O2 and Three UK. They will have to wait for
the U.K. to auction more mobile spectrum early next year before
they can offer a similar service.
Fourth-generation, or 4G, mobile broadband typically allows
consumers to download data such as movies, music and video some ten
times faster than older 3G networks.
The U.K. is lagging badly in its rollout, with some 45
countries, including the U.S., Germany, Scandinavia and parts of
Asia, already offering the superfast service to businesses and
consumers. Top-of-the-range mobile phones are all 4G capable,
though not all will work on the frequency Everything Everywhere is
using. It's also unclear whether Apple Inc.'s (AAPL) hotly
anticipated iPhone 5, widely expected to be launched next month,
will work on that frequency.
A Everything Everywhere spokesperson called the Ofcom's decision
good news for the U.K.
"4G will drive investment, employment and innovation and we look
forward to making it available later this year, delivering
superfast mobile broadband to the UK," the spokesperson said.
Everything Everywhere said it will launch its 4G services by the
end of the year under a new brand that will sit alongside its
existing Orange and T-Mobile brands. It didn't say how many
consumers or businesses will be able to benefit.
Matthew Howett, an analyst at research firm Ovum, said the
company has enough spectrum to reach a "good proportion" of the
country, depending on whether the network upgrade is completed in
time.
"I know from discussions with them that's something they've
already started a number of months ago, so I think they should be
in a fairly good position from the get go," he said.
The faster service will allow people to download a movie in 10
minutes or an album in 60 seconds, down from an hour via a 3G
network in use today. It could also give people in more rural areas
access to superfast broadband in their homes for the first
time.
Everything Everywhere's ability to steal a march on its rivals
is the result of the merger of Deutsche Telekom's T-Mobile and
France Telecom's Orange networks, giving the combined company a
surplus of spectrum.
Ofcom's decision to allow Everything Everywhere to use the
spectrum for 4G, angered its competitors.
"We are frankly shocked that Ofcom has reached this decision," a
spokesperson for Vodafone's U.K. business said. "The regulator has
shown a careless disregard for the best interests of consumers,
businesses and the wider economy through its refusal to properly
regard the competitive distortion created by allowing one operator
to run services before the ground has been laid for a fully
competitive 4G market.
Telefonica's O2 said it was "hugely disappointed."
Three UK, the smallest of the U.K.'s four mobile operators
signed a deal Tuesday to buy 4G spectrum from Everything Everywhere
for an undisclosed sum. The deal was part of an agreement
Everything Everywhere made with the European Commission to get
approval for its merger. It's unclear, however, when Three will be
able to use it.
"We can only use the spectrum when it is cleared - and
Everything Everywhere isn't obliged to do that until Sept 30 2013,"
a Three UK spokesman said.
The competitors could appeal Ofcom's decision, and so block the
Everything Everywhere's 4G launch. A Vodafone spokesman said the
company is considering all options, including legal action.
Ofcom last month said it would kick off an auction of mobile
spectrum in the U.K. before Christmas, paving the way for mobile
operators to offer 4G services from the second half of 2013. The
timetable for the auction has been delayed by a year due to
consultations and threats of legal action, as operators jostled for
the biggest chunk.
Write to Lilly Vitorovich at lilly.vitorovich@dowjones.com;
Twitter: @LillyVitorovich
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