4G auction: Ten things you need to know about the 'superfast' network

Jonathan Weinberg

Four major firms today all won a piece of the mobile 4G pie (PA)

The Government has announced the winners of its auction of 4G mobile phone networks - set to bring superfast internet surfing speeds to millions of handsets around the UK.

Vodafone, O2's parent company Telefonica, Hutchinson 3G - owner of Three - and EE were all successful in buying licences to run parts of the nation's new mobile airwaves, with BT also winning part of the network auction.

The auction, which took 50 rounds to finalise, raised £2.3 billion for the Government - £1.2 billion less than expected. But now the decisions have been made, what does it mean for the average mobile user?

Here are 10 things you need to know about the 4G licences, how it will affect the smartphone in your pocket and your mobile habits.

How quickly will 4G services become cheaper?

The obvious economics suggest that the more companies offering 4G, the cheaper subscriptions will become.

Right now, only EE sells 4G technology and monthly costs begin at around £40. However, you need a compatible mobile, which could cost hundreds of pounds.

But with new services starting within the next six months, this extra supply should drive down prices and therefore increase the demand.

Right now experts are unsure what that demand is, as EE has not provided any detailed subscriber numbers.

Will everyone copy Three and offer 4G without a premium cost?

Three has already stated it won't charge more for 4G than 3G but with just 13% of the network capacity, it remains a small player.

Its Chief Executive Dave Dyson said: "Doubling our capacity allows us to continue our growth with significant headroom to increase our current base of over 8m customers.

"With a significantly increased spectrum holding we will continue to be the competitive force in the UK mobile market."

So the cash-strapped consumer will pay the price as usual?

Maybe not. While Three may not tempt millions away from the bigger names, it will cause them a headache, keeping them on their toes.

Ofcom hoped this would be the case and it is one of the reasons it wanted a fourth company to have a stake in 4G.

Ernest Doku, telecoms expert at uSwitch.com, said: "What is important is that this extra expense isn't passed onto customers - especially in the form of tariff price rises."

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Is 4G available in all parts of the UK?

Before this latest announcement, EE was aiming to bring 4G to 65 cities and 55% of the population by June this year.

The addition of Vodafone into the race will extend its reach far more quickly and widely. Vodafone was the highest bidder, paying £790.8 million for a mixture of two different types.

This ensures it can offer good and stable coverage both outdoors and indoors and may allow it to offer fast home broadband over-the-air.

Kester Mann, Senior Analyst Operators at CCS, believes the less money paid to the Government will actually be good for the consumer.

He said: "It should free up the carriers to more rapidly deploy networks and develop new services."

Will phone signals drop out as much?

Matthew Howett, telecoms regulation analyst at Ovum, believes the poor 3G coverage in some parts of the UK is one reason for the big mobile companies not digging deeper into their pockets this time around.

It has meant they haven't been able to attract the customer numbers they'd had hoped for in certain areas, where signals they own are patchy or have disappointed users.

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Mr Howett says the 800MHz airwaves purchased by all the networks enable signals to travel longer distances and penetrate buildings far better than 3G does now.

He added: "It could be argued that the relatively poor 3G coverage we have seen in the UK up until now is at least partially a result of operators being left out of pocket after the last auction that they had very little to actually spend on building the network. Things this time should be different."

How fast can I now work on the move?

Whether you're at home, in the office, on a train or in the furthest corner of Britain, you should benefit from 4G's rollout.

The auction provides operators with the opportunity to extend it into the home as well as use it to increase the speeds of public Wi-Fi networks outdoors.

It is especially important for those in outlying areas where traditional cables cannot reach.

Telefonica, which owns O2, has bought airwaves through which it must provide mobile broadband services for indoor reception to at least 98% of the UK population, and at least 95% of the population in each of the UK nations - England, Northern Ireland, Scotland and Wales - by the end of 2017.

BT's purchase is primarily designed for mobile broadband and Wi-Fi services and it will target rural areas.

Ian Livingston, its chief executive, said: "We have said that we do not intend to build a national mobile network.

"Instead, this spectrum will complement our existing strategy of delivering a range of services using fixed and wireless broadband."

So who is the dominant force now in mobile?

After getting a headstart with a launch last year, EE remains the biggest 4G player.

It has now acquired and achieved 40% of the nation's 4G network, compared to 31% for Vodafone.

It will be selling 4G services across the board from smartphones to mobile internet devices and plans to get a foothold in those rural areas too thanks to its potentially stronger signals.

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Olaf Swantee, Chief Executive of EE, said: "The acquisition of low and high frequency spectrum allows us to boost our superfast data services and coverage - indoors and outdoors, in cities and the countryside."

O2 however isn't in such a good position. The coming together of Orange and T-Mobile leaves it languishing on 16% of the 4G capacity, a problem considering it has a large number of smartphone users.

It was after all, the first network to bring the smart generation of phones to the UK with the original iPhone back in 2007.

What does it mean for mobile handsets?

Now 4G is open to all around the UK, the race to get the newest and fastest mobiles into people's hands begins.

At Mobile World Congress next week in Barcelona, we should begin to see what some of the big names have in store for a world where downloading and streaming will now be key.

Will screens get even bigger considering they are nearing 5inch already, most probably they will to take advantage of the movies and TV shows you'll be watching on the movie without buffering.

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They will certainly increase in pixel quality with far more importance placed on easy routes to obtain quality entertainment content in a couple of clicks and within minutes.

However, while 4G handsets will be the norm in the future, right now there aren't many of them, meaning those wanting to take up 4G will have to shell out for a new phone, especially iPhone users who don't own the latest version 5 model.

What you will get though is a new way of accessing entertainment:

4G brings speeds close to fixed-line home broadband to mobile phones, smartphones and tablets.

It is five to seven times faster than existing 3G networks and would mean for example that a music album download taking 20 minutes on 3G would take just three minutes on 4G.

Will it even be that popular?

Most experts agree that over time 4G will be the norm in the same way 3G is now.

However, it could take at least three years before this happens, especially as many mobile phone users are now locked into 24 month contracts whereas 12 or 18 months used to be the standard length.

Some networks may choose to offer incentives to switch such as no penalties for breaking a contract and Kester Mann of CCS remains cautious: "Now the real hard work starts for operators – they need to rapidly deploy networks, carefully consider pricing and deploy marketing campaigns to convince consumers of the benefits of the technology.

"EE’s lack of disclosure yesterday of its 4G customers could signify that operators have plenty to do."

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