Mobile Network Comparison

At long long last, the UK’s auction of radio spectrum for 4G has finally started. The first stages of the actual bidding process are due to start very soon much to the relief of everyone who’s been waiting for a UK-wide 4G service.

The auction is being run by Ofcom but it has suffered numerous delays over the last few years. There has been lengthy and tedious legal wrangling between the main mobile networks about the terms of the auction. As a result, everyone has lost out and Britain is becoming the laughing stock of the Western world as it is so far behind in mobile broadband technology now.

Finally, Ofcom resolved the situation by giving T-Mobile and Orange owners Everything Everywhere (EE) a monopoly on rolling out 4G services. The regulator allowed the mega-network to repurpose its existing mobile spectrum to run 4G services on. This was last year before the auction for other 4G wavebands had been finalised. What it meant was that Everything Everywhere could launch 4G services first on the 1.8 Mhz spectrum while all the other networks had to wait to buy their own swathes of viable spectrum. EE eventually flicked the switch on 30 October last year.

Meanwhile, all the other networks have been patiently waiting for the auction to go ahead so they can pick up their own 4G spectrum. Last December, we were finally able to announce the finalised list of bidders. Vying for the limited amount of frequency allocations will be Vodafone, O₂ (Telefónica), 3 Mobile (Hutchison Whampoa), MLL Telecom, BT and PCCW Limited. EE is also bidding for more spectrum.

Ofcom has said that the new auction will double the amount of spectrum available for 4G mobile services. The auction bids will take place over incredible secure encrypted connections using brand new specially-designed software. This will ensure the confidentiality of the bids.

Up for grabs are 28 separate lots of radio spectrum. The frequency bands are split between 800 Mhz which was previously used for analogue TV signals and 2.6 Ghz. In total, an additional 250 Mhz of spectrum is going to be available. Ofcom expect that they will raise a total of over £3 billion from this auction.

We can expect the initial rounds of bidding to take place over the next month or so. Each company has taken extreme special measures to ensure the amount they are bidding remains a secret. The actual logistics of the auction are quite complicated as it uses what’s called the “combinatorial clock structure”. Effectively, Ofcom will provide guide prices and each mobile company has to decide which combination of frequency bands they want to bid on at those prices. Next, the price of each lot of radio spectrum is gradually raised until no-one is willing to pay the price any more.

We’ll continue to report on the auction as information comes in.

What do you think of the organisation of the 4G spectrum auction? Why do you think it’s taken so long? And which companies do you think will end up taking home some valuable 4G radio frequencies?

Phones 4u, the independent mobile phone retailer, has joined up with EE to launch the latest virtual network in the UK. The new network will one of many running on EE’s infrastructure and it’s not clear just yet what their unique selling point will be nor what we can expect in the way of price tariffs. The new network will be called LIFE Mobile and will initially launch as just a 3G service with 4G connectivity promised in the future.

Phones 4u started off as Midlands Mobile Phones in the early days of mobiles back in 1987. It first emerged as Phones 4u in 1996 and is headquartered in Newcastle. Since being sold for £1.5 billion just over six years ago, the company has bought out the online firm Dialaphone for about £10 million and partnered with the Dixons group.

The company’s turnover is growing despite a very poor customer services record and a controversy in 2008 when Ofcom ruled that they had been misleading customers. Phones 4u was recently acquired by a private equity group a couple of years ago in a £700 million deal and now has over 550 UK shops and about 5000 employees.

But why are Phones 4u getting involved in the mobile network business? The company is doing well as it is just selling mobile phones. In fact, they sold over 1.5 million mobile contracts last year. Still, despite the strong results, the company is probably looking to diversify its income stream especially as the recession has hit the high street hard in recent years. It’s certain that Phones 4u doesn’t want to go the same way as Blockbuster, Woolworths and Jessops.

The reason for EE getting involved is less clear. Effectively they will be reselling their own product with a lower profit margin by offering their services cheaper through a virtual network owned by Phones 4u. However, it has been claimed that LIFE Mobile will offer 4G services later in the year. Many industry analysts have suspicions that EE’s 4G uptake hasn’t been as high as they hoped. By offering a parallel cut-price alternative, EE might be hoping to corner both ends of the market. They can sell their premium 4G product at high mark ups through their high-profile EE brand while bargain seekers might still sign up at a cheaper rate through Phones 4u. Although the marketplace is already quite crowded and Phones 4u are years behind rival company Carphone Warehouse and their Talkmobile network, branching out in this way would seem to be a smart move.

Having said that, there is certainly some reason for questions about how independent Phones 4u will remain now it’s running its own network. Given that it used to sell tariffs from all the major networks, it’s hard to see why they wouldn’t promote their own service more now. Will customers be losing out because they get biased advice? It’s too early to tell now but the Phones 4u head Tim Whiting has been quick to counter any fears. He claimed that the company will be focussing on customer satisfaction rather than sales volume. With the Phones 4u track record, this might be a little hard to swallow but we won’t make any judgement yet.

One other issue that Phones 4u might not have fully investigated is their choice of name. LIFE Mobile doesn’t utilise any of the brand recognition they have already through their high-street presence which is an interesting choice. It may be to differentiate the two to increase the perception of independence. However, there might be an issue as there is already a mobile company called Life Mobile. Jay Bartels runs a business in the US and has trademarked his company as Life Mobile over a year ago. We’ll look on with interest to see Whether this will result in a lawsuit in the near future.

LIFE Mobile will launch in March 2013 and we’ll be writing up our full review of them once we’ve had a chance to try out a SIM card.

What do you make of this? Can Phones 4u shake their negative customer service image? Do we really need another virtual network? Would you consider using this on your phone? And what do you make of the decision to partner with EE?

What are the best ways for manufacturers of smartphones and other handsets to distinguish themselves in the market today? With the increasing dominance of Samsung and Apple phones (they sell about 50% of all smartphones produced now), their rivals are becoming increasingly desperate to get a foothold in the market. They want to ensure that they get as big a slice of the smartphone pie as possible.

There have already been plenty of rumours about a new cut-price iPhone – presumably as Apple’s only mobile products are aimed at the upper end of the market and this will allow them to dominate across the entire horizontal. And it’s hard to argue with the sales figures from Samsung over the last twelve months. Not only are they now outselling the iPhone 6 with their flagship Galaxy SIII but they have leapfrogged Nokia to be the world’s biggest mobile producer by handsets sold.

Many are claiming that there’s a very obvious reason why Samsung is doing so well. We would agree – it seems to make perfect sense. The reason Samsung sells so many phones is because it’s flooded the market with a huge variety of Android smartphones for just about every imaginable niche. It has got high powered camera phones, dedicated media playing phones, phones that are good for gaming and others that are good for business. And most, importantly of all, it has a range of phones at every possible price point.

Samsung’s arsenal of mobiles starts with the sub-£100 cheapies that networks can give away on budget contract or, alternatively, you can pick up in the supermarket for your kids or to keep as a spare. And they go all the way up to the mighty Samsung Galaxy SIII with its mighty 8MP camera, gorgeous screen and lightning-fast quad-core performance. No matter how much you’ve got to spend or what sort of phone you’re after, chances are there’s a phone for you. Conversely, if you want an Apple iPhone, even if you’ll put up with a tired old iPhone 4 (a 30 month old model) you’ll be looking at paying more than £600 over the course of your contract. So it seems much of Samsung’s success is attributable to the breadth and depth of their smartphone offering.

But not every mobile manufacturer is going down this route. A top Sony executive has claimed that Sony Mobile might withdraw from the entry-level smartphone market. The claim is that they don’t want to compromise the brand with sub-standard products but cynics might see a relationship between Sony’s statements and the terrible Xperia J which came out last year.

Instead, Sony are potentially going to be focussing solely on the pricier smartphone for the more well-to-do customer. This is backed up by the latest announcement fresh from the Consumer Electronics Show in Vegas. Sony’s most impressive handset yet will be the Xperia Z and it comes complete with a huge 1080p screen, 2 gigs of RAM a quad-core CPU and, of course, 4G connectivity. It’s due out in March but all this comes at a price – it’s looking like the Xperia Z will set you back more than £500 just for the phone.

By concentrating on high-end expensive phones Sony are helping they will gain traction as a premium brand in customers’ eyes and be distinguished from other companies in this way. Sony want to sell more but they also want their phones to be immediately recognisable as high quality.This definitely seems to be their tactic for the future as CEO Kaz Hirai has directly confirmed his aim to concentrate on the high end.

It’s not just Sony who are trying out this new tactic though. HTC have long had a reputation for producing great phones for cheap but in recently months they too been trying to produce a smaller number of higher quality smartphones rather than relying on a “spray and pray” strategy. Similar murmurings have been emanating from Motorola Mobility too so it may well turn out to be a larger trend.

What’s your take on all this? Is Samsung’s success really down to its range of handsets. Will companies actually do better by focussing on fewer better-quality phones? And do you like the look of Sony’s Xperia Z?