Britain's biggest mobile operator Everything Everywhere (London) announced plans on Thursday to invest over $2.3 billion in the next three years to improve its coverage and prepare for the launch of a fourth generation (4G) network.
The group, a joint venture between France Telecom (Paris) and Deutsche Telekom (Bonn, Germany) which runs the Orange and T-Mobile brands, said it planned double-digit growth in its 2012 network investment compared with 2011.
Everything Everywhere said the work would further integrate the two existing networks and kick off preparations for the rollout of a 4G network which will enable faster access to the Internet via mobile devices.
"With mobile data increasing 250% over the past two years, we are making these investments so we can deliver on our ambition to provide the UK's most reliable, biggest and best mobile data network," Chief Executive Olaf Swantee said. "We believe that the UK requires a 21st century infrastructure and are committed to rolling out 4G as soon as possible to support growing data use, connect parts of the country with little or no mobile broadband, and drive economic growth."
Telecoms analyst Nick Brown of Espirito Santo said Everything Everywhere appeared to be positioning itself for a coming auction of 4G spectrum in Britain, whose terms are being thrashed out amid appeals from all the operators.
Securing spectrum suitable for fourth-generation networks is crucial for operators, who need to keep up with booming demand fuelled by consumers using smartphones and tablets to access bandwidth-hungry services like YouTube and Facebook on the go.
Regulator Ofcom has not yet published final rules for the auction, which is due to take place in the second half of 2012. Germany has already sold its 4G spectrum and auctions are under way in France and other European countries.
"We wouldn't be surprised to see it pushed back further to 2013," said Brown. "The UK is falling behind when it comes to selling off these airwaves."
Everything Everywhere is in a weak position compared with rivals Vodafone (London, England) and O2 (Berkshire, England) because it currently owns no spectrum suitable for 4G networks, which are capable of carrying more data faster. Such networks already exist in parts of the United States, Scandinavia and South Korea, among other places.
Ofcom originally planned to set the auction terms to ensure that at least four operators would be able to run 4G services, but both Vodafone and O2 have complained, delaying the process.
Hutchison Whampoa's Three (Hong Kong, P.R.C.), Britain's smallest mobile operator, fears being squeezed out by its bigger rivals and wants caps to be set on the amount of spectrum that operators can be awarded. Three designed its existing network for data rather than voice and is the only operator in Britain still to offer its customers all-you-can-eat data bundles.
"Three is the big loser here because it's due to run out of capacity next year, partly because they're still insisting on selling unlimited data packages," said Espirito Santo's Brown.
Everything Everywhere said customers of both Orange and T-Mobile using the existing networks should see coverage improvements in the coming weeks. For the future it will invest in improved equipment that provides faster and more reliable coverage and which will be upgraded to 4G once the appropriate spectrum becomes available.
(Editing by David Cowell)
Historically, network infrastructure is the most expensive component in a mobile operator's overall CAPEX, which holds true in China, the biggest and fastest growing 4G market in the world. This report provides an in-depth overview of market revenue, equipment shipments, and the competitive landscape for carriers. Buy now