A new report suggests that the long delayed launch of 4G mobile phone networks in the UK could be a big boost to the UK’s lagging economy.
Capital Economics’ report suggests that 4G mobile networks will be worth 0.5% of GDP by the end of the decade – around £75bn in today’s figures. The research was commissioned by Everything, Everywhere (EE), owners of Orange and T-Mobile.
The research suggests that the industry surrounding 4G will be worth £5.5 billion in private investment, and create or safeguard 125,000 jobs.
"The introduction of 4G mobile broadband will create substantial long-term benefits for the economy and consumers, ultimately boosting UK GDP by as much as half a percentage point. The near-term £5.5bn private industry investment we project is substantial – and opportune for the wider economy given the recent investment slump," said the report’s author, Mark Pragnell of Capital Economics.
It will also serve at least 10m rural customers who currently struggle to get decent fixed line superfast broadband.
"This research highlights the significant economic and social benefits that 4G will bring to the UK – already enjoyed in over 30 countries around the world," said Olaf Swantee, CEO of Everything Everywhere.
The USA, South Korea and Germany already have relatively mature 4G networks. 4G devices have already started launching worldwide, including the iPad 3, which has been in trouble for advertising 4G here and in Australia, where it is incompatible.
"The UK has the highest levels of smartphone penetration and mobile commerce in Europe, and Britons deserve to have the best infrastructure in place to support this growth."
EE has also launched today the 4GBritain campaign http://www.4gbritain.org/ – which is designed to raise awareness of 4G amongst the populace and pressure the government to speed up the roll out. This has been supported by groups as wide as the Countrywide Alliance and National Farmer’s Union, through to Huawei and Virgin Media.
This follows on from research last week, also sponsored by EE, stating that most customers surveyed want 4G as soon as possible.
Ofcom, the telcos regulator, will be auctioning the required radio frequencies at year end, once analogue switchover is complete. This could see a potential rollout of the next generation 4G LTE mobile phone networks in 2013.
Everything Everywhere has applied to launch 4G on its own spectrum before then, to the consternation of rivals. Ofcom has given the proposal the tentative go-ahead, awaiting final judgement.
"The importance of bringing 4G to Britain can’t be underestimated. With a commitment to have the best super-fast broadband in Europe by 2015, mobile is going to play an important role. The earliest route to 4G would be through Everything Everywhere’s 1800MHz spectrum and Ofcom is right to be considering this option, however consumers will only see the true benefit if there is competition between operators in the provision of services. This can only be fully achieved through the joint award of spectrum at 800MHz and 2.6GHz planned for the end of this year," said Mathew Howett from Ovum Practice Leader, Regulation
Ofcom is currently going through the process of designing that auction. Given the troubled history the regulator has had in organising a fair auction (it was originally meant to occur in 2008), further delays are possible – hurting the UK long term.
"Unless there are some material changes to the current proposals (such as the removal of minimum spectrum portfolios), litigation seems almost inevitable. With no obvious way out of the deadlock any legal challenge could send everyone back to the drawing broad. Only a direction from the UK government could keep the auction on track and this is something that it must now wake up to," said Howett.
Further reading:
CBR’s feature on the UK’s troubled 4G history
