CCS Insight: Ofcom announcement on LTE

Yesterdays announcement was undoubtedly a brave move by Ofcom in the face of expected strong backlash from mobile operators. However, Ofcom believes that the benefits of allowing the launch outweigh the potential risk of distorting competition. The UK has lagged its European counterparts on this for too long which has led to questions about its technological leadership in recent months. With over 80 LTE networks already commercially live according to the GSA, the announcement is a great boost for the UK and makes up for lost ground in LTE deployment.

The main rationale for Everything Everywhere to launch at 1800MHz is the marketing and educational benefits it will gain. It’s a great opportunity for the operator to differentiate itself against competing rivals. While improved network speed and quality provide distinct opportunities, it is unlikely smartphones capable of offering LTE using Everything Everywhere’s 1800 MHz spectrum will be available in 2012. Initially we expect it to offer USB dongles with compatible smartphones following in 2013. Coverage is likely to be initially restricted to an ‘island’ approach.

We expect rival operators to vehemently oppose the move on the basis that it gives Everything Everywhere an unfair head-start. While legal challenges against the decision would only act to delay the process at this stage, it is important that those players who have lost out have a commercial Plan B to react to Everything Everywhere’s move.

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