4G, what’s in it for me?

Dr Jason Whalley, Director of Teaching and Learning in the Department of Management Science, and member of the International Telecommunications Society, explains what you should expect from the new 4G mobile network.

Given the success of the 3G spectrum auction in 2000, which netted the UK government more than £22 billion, expectations for last month’s 4G auction were understandably high. However, despite UK chancellor George Osborne’s predictions, the expected £3.5 billion windfall failed to materialise.

After fifty rounds of bidding, the five eventual winners; Everything Everywhere, Hutchison 3G UK, Vodafone, Telefónica UK and BT Subsidiary, Niche Spectrum Ventures, paid a fraction over £2.34 billion, combined, for their licences.

Not an insignificant sum, I grant you, but still some £1.2bn short of expectations and a significant dent to the treasury’s coffers. This begs the question; why weren’t the operators willing to pay?

Given Everything Everywhere - which was granted rights to roll out a limited 4G service early towards the end of 2012 - recently responded to poor 4G sales by slashing prices for the service, the reason for this shortfall becomes clearer.

When you consider licences are just one part of the total outlay winners will have to incur in launching 4G - each mobile operator will have to rebuild and revamp existing infrastructure to support the new services – it becomes even more apparent why the new mobile operators are exercising caution.

So what does this mean for you and I, the customers?

While the mobile operators have made a saving on the list price, in reality, it’s unlikely customers will see cheap tariffs. Of course, the highly competitive nature of the market will go some way to regulate prices in the customer’s favour, but the infrastructure costs are still likely to be passed to us.

What will be good news however is, largely because of its signal strength, 4G is better all round than previous mobile technology. Customers should be able to benefit from improved mobile coverage and they will not have to endure as many dropped calls as they presently do.

The licence won by Telefónica UK came with a coverage obligation that states that it must cover at least 98% of the entire UK population, with no less than 95% 4G coverage in: England, Northern Ireland, Scotland and Wales.

This is more than the Scottish government had argued for and represents a substantial increase over previous mobile coverage obligations in the UK. 4G should not only bring mobile Internet to some rural and remote areas for the first time, but it will also fill in those annoying gaps in urban areas, as it can infiltrate buildings more effectively.

In an interesting turn, BT also managed to secure a licence during the auction creating the potential for the telecoms giant to return to the mobile market for the first time since cutting ties with O₂. However, this is unlikely as BT’s focus remains to improve the delivery of its existing landline, broadband and television services to customers.

So, as with most new technologies, 4G will undoubtedly have pros and cons. For the customer, there should be significant improvements in speed. For network operators, 4G will require large scale investment if they are to maintain speeds at levels to live up to hype.

Ultimately, this means prices will probably not fall by as much as customers would like or expect.

How much would you pay for a 4G service? How long before we can expect 5G?

Let us know your thoughts in the comments below.

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