Has O2 Bitten Off More Than It Can Chew With 4G In the UK?

By Sam Gibbs on at

Now that Ofcom's finally managed to get TV to clear off the band allocated for 4G across the whole of the UK, O2's fired-up and ready to go with its own 800MHz-powered 4G network. But what impact will it have on existing customers, and is O2's limited chunk of spectrum really enough to support a fast LTE network like EE's?

You see, O2 won big in the 4G spectrum auction in the 800MHz band sale, which should provide good distance coverage into rural areas, and deep building penetration so you can use it indoors. However, it also has a lower data carrying capacity than the alternative 2.6GHz 4G band that was also auctioned off at the same time. O2 failed to bag any of the 2.6GHz chunk, seemingly underestimating how much money would be thrown at it and being out-bid (or just not bidding in the first place), leaving the network without any of the high-capacity frequency that's typically used to cover densely populated areas like cities.

Rumours were rife about BT's purchase of a chunk of 2.6GHz 4G-capable spectrum, and that O2 might partner up with BT to use its spectrum to extend its network. However, at least according to the latest word out of O2 there are "absolutely no plans regarding BT" and "no conversations have taken place with BT to that effect".

Instead, according to O2's Business Director Ben Dowd, O2 has "other strategies" to support inner-city areas and aid its 800MHz LTE network. Dowd talked-up O2's Wi-Fi network -- the "fastest growing in the UK" with over 9,000 hotspots apparently -- but given that it's recently gone-it-alone, ditching access to BT Wi-Fi, can it really support customers craving data in cities across the country? I highly doubt it, unless there's a massive expansion of the number of hotspots and backhaul supporting them.

Dowd also stressed that O2's 2G and 3G service would play a big part in its "variety of network capacity" to support its customers. That strikes me of a network that thinks 4G isn't the be-all and end-all of mobile in the UK, which is probably wise, but could be a sign that O2's not that confident in the new mobile standard. At least, not as forthright and confident as EE has been, that's for sure; perhaps that's all marketing positioning and spin, though.

The other problem O2 has, according to data provided by Ofcom and EE on all the UK networks, is that O2's spectrum allocation across all the bands available for broadcasting a mobile network in the UK (not just 4G), is pretty small compared to its large subscriber base.

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Even with the spectrum the network snagged at the 4G auction, O2 is quite far behind Vodafone and EE according to the stats, and only just ahead of Three. For instance, O2 has 43.2MHz of spectrum across the UK, which works out as a 15 per cent share of the total available bandwidth. Considered the smallest network in the UK, Three clocks in with 35MHz across all bands, which is a 12 per cent share. But when you look at Vodafone's 28 per cent share with an 80.7MHz allocation, and EE's colossal 36 per cent share with a total of 105MHz, you suddenly see what O2's up against.

What does having a limited spectrum share actually mean? Less overall carrying capacity to support subscribers, which potentially results in more bottlenecks and poor contention ratios for the user on the ground (too many people trying to connect to the same mast using the same chunk of spectrum). However, according to Ben Dowd, O2's 4G spectrum chunk and new network rollout will allow the company to increase its network capacity by "30 fold", which is good considering O2 customers have gobbled down twice the amount of data on average in just the last 12 months.

You might have already seen the kinds of capacity issues we're talking about here on O2 and other networks. It's where your phone shows full signal but you just can't pull any data down. When this happens to me, my phone gets super hot and chews through battery like a fat kid through cake, behaving like it's having to try incredibly hard to pull on a rope that just will not move. An extremely frustrating experience.

Of course, O2's 4G network probably won't suffer from this kind of issue, especially at the start, thanks to the large chunk of 800MHz it grabbed and the 30-fold increase in network capacity it'll apparently afford. But there's a possibility that the influx of customers looking for 4G will impact those on 3G, as LTE won't be everywhere for a couple of years, and a lot of users will have to rely on O2's 3G network, potentially stretching it to breaking point. Dowd went to great lengths to stress, again, that O2 will continue to invest and extend its 2G and 3G network, hitting Ofcom's 99 per cent coverage requirement. He also said that O2's network engineers constantly roam the country looking for patchy or bottlenecked areas. However, I personally haven't seen any evidence along my narrow corridor of West London to show O2's actually fixing overcapacity issues, which is what forced me to switch networks.

Whatever the end result of spectrum allocations and network capacity, it's good to see another network get in on the 4G action in the UK at last. We're expecting Vodafone to follow suit next week, with Three following along at some point in the near future. Hopefully once O2 unveils its pricing and flicks the switch on August 29th, we'll finally have some competition for EE and its high prices. Be warned though, O2's said that 4G pricing will be from £26 a month and up, and if that's SIM-only, it's going to be pricy prospect just like EE's 4G plans are currently.