4G spending spree takes place in UK

The 4G spectrum auction raised less than the Government hoped. But businesses should still benefit.

George Osborne might not be rushing out to buy a new 4G phone this week. The Chancellor of the Exchequer had factored in a £3.5 billion windfall from the 4G spectrum auction. In the end this fell short, with Ofcom raising £2.34 billion from five bidders.

But although Mr Osborne might have to recalculate his income forecasts for the next budget, industry is likely to see the end of the UK’s long and winding road to 4G in a more positive light. EE, which launched early 4G services using its existing spectrum last year, will now by joined in the super-fast lane by Vodafone, O2 (through its parent, Telefonica), Three, and Niche Spectrum Ventures, an arm of BT.

With five operators, the 4G market should benefit from competition, bringing down prices. EE has come in for some criticism for pricing its 4G plans at a premium to its 3G data plans, with subscribers who use large amounts of mobile data paying considerably more in some cases.

For businesses, the cost of subscriptions might matter less, than the risk of being locked in to a single provider, or the cost of having to renegotiate existing contracts, in order to move to 4G.

According to industry analysts, once the main mobile operators have 4G networks up and running, they are likely to offer enterprises 4G connections at little or no premium to 3G. That, of course, is in the operators’ interests: 4G is more efficient than both 3G or GPRS (2G data services), and by moving users to 4G, the mobile companies are freeing up scarce capacity. In time, 4G could even cost less than 3G. Handset prices should fall too.

With this in mind, IT directors should start to factor 4G into their plans, and ideally ask operators to migrate users over as soon as the networks are live. The easiest group to migrate is likely to be workers with laptops and 3G dongles, with smartphone users moving next, due to the devices’ relatively short lifecycles.

For businesses, the cost of subscriptions might matter less, than the risk of being locked in to a single provider, or the cost of having to renegotiate existing contracts, in order to move to 4G.

But the real benefits will come from the type of applications that 4G can support. As Tony Summers, interim CIO at East Sussex County Council, points out there are plenty of line-of-business applications that simply do not work on 3G: they need Wi-Fi or a 4G connection to operate at an acceptable speed.

And local government’s specialist applications are not the only ones that will benefit. According to Gary Calcott, technical marketing manager at Progress Software, we are likely to see developments such as higher-speed data streaming, and more video content, in applications running over 4G. But both industry experts warn that the networks will need to offer comprehensive coverage for 4G to have a meaningful impact.

This could be easier, if the mobile operators have bought 4G spectrum at a bargain price. Once criticism of the vastly more expensive (£22 billion) 3G auction in 2000 was it left little money to actually build those networks. And, as Jay Karsandas of mobiles.co.uk suggests, 4G take up is likely to increase towards the end of the year. “With auction bids lower than expected, maybe the networks will lower prices earlier than expected,” he said.

That would be a welcome boost to UK business, if not to the Chancellor’s coffers.

Stephen Pritchard is a contributing editor at IT Pro