Doubling 4G capacity puts EE in a strong position say analysts

Providing increased 4G speeds now prepares the way for future demand, while putting pressure on rival operators ahead of their launch of 4G; but EE needs to communicate the benefits in easily understandable terms to customers

Doubling 4G capacity puts EE in a strong position say analysts

UK mobile operator EE’s announcement today (9 April 2013) that it is doubling the amount of spectrum it allocates to its 4G network is being seen as a bold and shrewdly timed move by industry analysts.

Kester Mann, senior analyst operators at analyst company CCS Insight, said: ‘The fact that EE has chosen to announce that it is doubling the average speed of its 4G network to 20Mbps in ten UK cities, shows shrewd timing on the operator’s part and capitalising on its pioneering role as the leader in 4G.’

Matthew Howett, telecoms regulation analyst at Ovum, said: ‘Not content with merely being the UK’s first 4G network, EE is also defining itself as one of the boldest. By doubling the amount of spectrum it is using for 4G, it will effectively double the speed and capacity of the network. Given EE’s large and contiguous holding of spectrum at 1800MHz, this puts them in a very strong position and makes it more difficult for their peers to play catch-up once they launch networks in the coming weeks and months.

‘While there may be few applications that need speeds of up to 130Mbps today, the point really is that there almost certainly will be in the future, and that by doubling the amount of spectrum set aside for the 4G deployment today, the network should have the capacity to support an increasing user base in the months to come without impacting on the customer experience,’ said Howett.

The operator revealed today that it is doubling the amount of 1800MHz spectrum devoted to 4G from 2 x 10MHz to 2 x 20MHz. EE has 2 x 45MHz of 1800MHz spectrum, far more than any of its rivals, which it can refarm for 4G. EE said this will provide speeds of up to 130Mbps, although average users speeds are expected to be around 20Mpbs.

Howett noted that recent Ovum research shows that the 1800MHz band has rapidly become one of the most important bands for LTE. One of the key benefits is the capex savings enabled by refarming existing 1800MHz spectrum, which allows operators like EE to utilise existing sites and masts and make such rollouts possible.

Mann added: ‘The extra capacity will not only enable EE to offer a richer mobile experience, which will include HD video, multi-tasking and enhanced corporate services, but it also positions EE strongly to capitalise on emerging technologies that may require greater bandwidth for optimal performance.

‘However, EE needs to be careful how it communicates these improvements to its network to make the benefits crystal clear to customers. This is because users do not always understand the concept of data volumes and speeds. Although it has yet to make any comment on pricing, this gives the operator an opportunity to offer a tiered pricing structure based on speed.’

Despite rumours of a weak take up of its 4G services, EE also confidently predicted it would have more than 1 million 4G users by the end of 2013. Howett commentated: ‘With six months already under their belt, but eight months still to go, they are perhaps just under half the way there – a number that is probably more than most had expected at this stage.’

He continued: ‘We have said previously that a first mover has something of an uphill struggle trying to convince consumers to go out there and buy into something they have no experience of using. The best bet for EE, along with its competitors, is to state the advantages of their networks in ways that consumers understand and can relate to – for instance how long it will take to upload a photo, download an HD movie, access storage in the cloud, or just how well it will steam the BBC iPlayer during peak times.’

EE’s move does put pressure on its competitors to provide strong 4G services when they launch later this year. CCS Insight’s Mann said: ‘It raises the bar for competitors Vodafone and O2, which we expect to launch rival networks in May or June. Furthermore, EE has also revealed a target of more than one million 4G customers by Christmas 2013. Should it reach this customer target, it would see the operator rapidly close the gap on leading European 4G carriers.’

Mann continued: ‘Having spent more than its rivals at the 4G auction, Vodafone could assume a position to replicate EE's move. However, this does put O2 at a competitive disadvantage as it failed to secure any additional spectrum above 800MHz [in the recent 800MHz and 2.6GHz spectrum auction]. EE's announcement also raises questions about 3's positioning.

‘It has promoted DC-HSDPA as offering realistic data speeds of 12Mbps, claiming that it is nearly comparable to the 13.8Mbps for LTE. While EE’s announcement counters this message, it is unlikely 3 will be unduly concerned because it is more focussed on targeting cost-conscious consumers who place a stronger value on access to unlimited data,’ concluded Mann.

Howett added: ‘Not so long ago, it looked like Britain would be condemned to the slow lane for years to come. However in just six months, over half the UK has now been covered with 4G LTE with a rollout that’s continuing at pace. While EE certainly hasn’t taken its head start for granted, the real test will come once Vodafone, O2 and Three launch 4G LTE networks of their own after winning spectrum in the recent 4G auction – a moment that is now just a matter of weeks away.’

See also: EE doubles 4G network capacity to provide users with average speeds of 20Mbps

Written by Wireless magazine
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