The UK regulator has given Everything Everywhere permission to use its existing 1800MHz spectrum to deliver 4G services, much to the chagrin of its rivals.
Ofcom said it made its decision on the basis that it will deliver significant benefits to consumers.
EE can deliver a 4G service from 11 September, but has not revealed a precise date.
“Ofcom's decision to make 4G available this year is great news for the UK,” said an Everything Everywhere spokesperson.
“Consumers will soon be able to benefit from the much greater mobile speeds that 4G will deliver.
“4G will drive investment, employment and innovation and we look forward to making it available later this year, delivering superfast mobile broadband to the UK.”
Informa analyst Thomas Wehmeier agreed, saying EE has “a golden opportunity” to establish an early lead in the UK’s 4G market.
“Today’s news should be seen as a strong vindication of EE’s bold decision to invest heavily in readying the ground for LTE without having the regulatory clarity that would have mitigated any such risks,” he said.
However, one major hurdle is the lack of any 4G devices on the UK market.
In addition to the benefits to consumers, Ofcom said that there is “no material risk that those benefits will be outweighed by a distortion of competition”.
However, EE’s competitors have taken major issue with this.
“We are frankly shocked that Ofcom has reached this decision,” said a Vodafone UK spokesperson.
“The regulator has shown a careless disregard for the best interests of consumers, businesses and the wider economy through its refusal to properly regard the competitive distortion created by allowing one operator to run services before the ground has been laid for a fully competitive 4G market.”
O2 was less vociferous in its criticism, but equally frustrated.
“We are hugely disappointed with today’s announcement, which will mean the majority of customers will be excluded from the first wave of digital services,” said a spokesperson.
“This decision undermines the competitive environment for 4G in the UK.”
Analysys Mason’s Morgan Mullooly said the decision was "rather startling", if not completely unexpected.
“The inertia in actually getting to the 800 MHz/2.6 GHz auction seemed to be making Ofcom impatient and its initial receptiveness to the EE proposal seemed to betray that impatient attitude. This was borne out in today’s decision.”
Vodafone went a step further by suggesting that EE and 3 could delay the main auction to give them more time to market its services.
“Ofcom’s timing is particularly bizarre given the reports that EE is currently in discussions to sell some of its spectrum to 3, which Ofcom has previously been at such pains to protect with its over-engineering of the 4G auction. This means the balance in the auction will fundamentally change,” added the Vodafone spokesperson.
“The regulator has spent several years refusing to carry out a fair and open auction… its decision today has granted the two most vociferous complainants [3 and EE] during that entire process a massive incentive to further delay it.”
3 is line to get the 2x15MHz spectrum that the European Commission is forcing EE to divest as a result of the Orange-T-Mobile merger.
“The sale must be finalised by 30 September 2012 meaning the UK could conceivably see two 4G networks up and running by Christmas,” said Wehmeier.
A legal challenge by Vodafone of O2 could conceivably stop both in the their tracks, however.
Patrick Clark, head of telecoms at international law firm Taylor Wessing, said Ofcom must be “pretty sure of their legal grounds or at least be confident enough that there are currently not sufficient grounds for challenge”.
Even if there is no legal challenge today, the other operators will be keeping the situation under review: “They will be looking for any possible action on the part of EE with their newly acquired monopoly status that could justify a complaint under UK or EU competition law,” she said.
Mullooly said a legal challenge was certainly possible, but both he and Wehmeier warned of the Catch 22 the two rivals would be in if they go down this road.
“The risk for the UK other’s mobile operators is that dragging this through the courts could serve only to further delay the timing of the upcoming auction and thereby pause their own plans to launch 4G,” said Wehmeier.
Added Mullooly: "It could have the effect of lengthening EE’s first mover advantage and its ability to capitalise on market share."
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