Today's been rather a momentous day in the UK mobile arena, following local regulator Ofcom's approval of Everything Everywhere's plans to use existing spectrum to roll out LTE service early. Vodafone, O2 and Three have complained in unison against the market distortions that would result from one carrier having 4G while everyone else waits for an oft-delayed auction, but their biggest fear may yet remain unspoken: a de facto exclusive on the next iPhone.
Come September 12th Apple is widely expected to announce its next generation iPhone, replete with LTE connectivity to match the 4G options available on its latest iPad. It doesn't seem like too much of a stretch to envision Apple providing at least one version of the next iPhone with 1800MHz LTE, which would satisfy the previously unserviced needs of mobile buyers in South Korea, Germany and, yes, the UK via Everything Everywhere (EE). And whether it's a coincidence or not, it does no harm that T-Mobile and Orange (the two brands whose union gave rise to Everything Everywhere as a company) will be free to start offering LTE to their customers on September 11th.
You can't ask for a better halo device to introduce a new premium service with
The market edge that EE gains over its competitors by being first with fast mobile broadband would, in such a scenario, be exponentially magnified. Two of the hurdles to any carrier seeing rapid adoption — educating users about the benefits of the new technology and making them see value in paying a higher price — are central to Apple's strength as a company. In piggybacking on the prospective iPhone announcement, EE would enjoy the halo effect of having Apple conduct the LTE education sessions in advance, plus the comfort of knowing it can charge a premium without consumers scoffing (too much).
Seen in this light, the gruff indignation from the other UK carriers starts to make perfect sense. The much-maligned 4G spectrum auction in the UK will start accepting bids in early 2013, with the actual service following in the third quarter — though we're most likely to have to wait until late into the year before there's widespread access. Until then? T-Mobile and Orange gain a practical exclusive on the latest and greatest iPhone.
Consumers may not immediately comprehend all the advantages of 4G over 3G, but there'll be a fast iPhone to buy on Everything Everywhere's sub-brands and just regular old iPhones to buy elsewhere. This technological advantage would be the closest the UK market has come to a one-operator hegemony since the original iPhone's O2 exclusivity.
In the words of Jean Rhys, "when trouble comes, close ranks"
It's rare to see arch rivals Vodafone and O2 agreeing on anything, so their unified (and ultimately fruitless) efforts to defeat EE's proposed pre-auction 4G service betray a deep-seated fear of its disruptive potential. That potential could be vividly realized by an LTE iPhone, the only device with the ability to create a two-tier perception among consumers.
Ofcom, the regulator at the center of this maelstrom, takes a pragmatic attitude to the situation, arguing that EE would gain a market advantage, but not one significant enough to negatively affect consumers. In its judgment, we're all better off having some form of 4G in the UK today than none — and whatever pricing issues that may create will be ironed out by the eventual enabling of 4G networks by rival carriers. That may be so if all operators are competing on an equal iPhone footing, but what happens if they're not?