Forget what we said, LTE is just a 3G tweak

Late last month Everything Everywhere, the joint network sharing company for Orange and T-Mobile in the UK, launched a bit of a media blitz to push for an early LTE  go-ahead (see - Everything is Everywhere and spectrum policy is all over the place).

Their  two networks (now shared) were both established in the early 1990s as what were then called Personal Communication Networks (to differentiate them as a sort of GSM lite) and were granted space in what was then regarded as the flakier end of the spectrum range, at 1800MHz. The two networks (and services) ended up being owned by FT and DT respectively.

Time rolled on and guess what? When it comes to LTE it's turned out that owning lots of contiguous spectrum in that band is actually a real blessing. It could enable the FT/DT joint venture to launch LTE by reallocating some of the old spectrum to the new technology.  Such a move would put it way ahead of its big rivals, Vodafone and Telefonica (with O2) who will have to wait another year or two before they can roll out LTE after the regulator assigns new spectrum in the 800MHz and 2.6GHz bands, probably (all going well) at the end of this year.

Everything All Over The Place, true to its name, wound itself into a pitch of excitement and commissioned some self-serving research which showed that LTE could represent a huge growth boost for the UK just when it needed some infrastructure investment to offset 'austerity'.  LTE, all on its own, could be worth £75 billion to the UK by the end of the decade, it claimed. Ofcom should act quickly and let EE into the market early.

Naturally its rivals saw things differently.

Both Telefonica and Vodafone UK have pointed out that such a dispensation for EE would amount to giving it an unfair first-mover advantage, especially if such a lot of economic goodness was predicated on the introduction of LTE as EE asserted.  The rival companies, in their submissions to Ofcom, argued that such a move would grant EE an 18 month 4G monopoly. This was deeply unfair in competitive terms, considering that by being allowed to combine their networks, Orange and T-Mobile's EE was now the largest player in the UK. Letting EE out of the LTE gate early would undermine real competition for years to come, the rival companies have claimed.

Whoops. Time for a quick rethink.

On further consideration Everything All Over the Place now maintains that all this LTE hype has been boosted out of all proportion.  It now sees a lot of sense in the idea that LTE is merely an "incremental"  3G (not 4G, note) upgrade and EE being able to deploy it early would in no way give it any lasting competitive advantage or cause any "distortion of competition".

In the end EE's second position will no doubt be closer to the unfolding truth than its first. Like 3G before it, LTE (which is not actually 4G) will provide some welcome speed and cost improvements for operators as they struggle to keep up with mobile broadband demand.  But nothing really 'generational' is happening in the transition, except perhaps the adoption of IP end-to-end.  Just as important, capacity and cost improvements will  come from smaller cell-sizes and the addition of lots more WiFi - the 'G' forces are, once again, being over-estimated because they're easier to grasp from a marketing view-point.

So how will Ofcom respond? It will probably let EE go for its incremental cost improvements (calm down Vodafonica!) with an early deployment at 1800MHz, but it will demand that EE somehow shells out some of the spectrum it has already undertaken to sell as the price of its being able to share networks.