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4G licence auction heralds new dawn of rich mobile services – or will it turn operators into “digital drugs mules”?

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The Ofcom auction for the UK’s 4G licences has been completed in record time and has seen the treasury trouser a relatively paltry £2.3billion – the chancellor was expecting around £3.5 billion and the 3G licence auction saw the state earn £22 billion.

Unlike the 3G auctions, this latest round has spawned only one new ‘opertor’ – Niche Spectrum Ventures (VSV) – which has purchased shorter range 2.6GHz spectrum, most likely to roll out a tranche of ‘super wifi’ hotspots, probably for BT Broadband users.

O2 – which paid £550million to secure two 10MHz ranges at 800MHz – has confirmed that it is now planning to press ahead with plans to roll out its 4G services in the UK starting this summer. It is hoping to be able to cover 98% of the UK population (and stresses it will also work indoors) and has already commenced upgrading its network capability. The spare change the operators have after paying less for the licences than expected is likely to see much more rapid network upgrades.

But what does it mean for business? Rhian Kelly, CBI Director for Business Environment, says that: “Digital networks are as vital today to growing the economy as road and rail links. Faster connections will drive private investment, underpin jobs, spark innovation, particularly with small firms. Globalisation means firms are increasingly ruthless in choosing where to base their operations, so the roll out of 4G services will be key to attracting inward investment as well as winning business overseas.”

According to O2 CEO Ronan Dunne: “While 4G will indeed allow for faster data speeds and a more seamless mobile experience, it is our intention to go beyond what has already been offered in the market and give our customers a unique and exclusive range of digital experiences, marking a new generation for the mobile industry.

“This is a truly landmark moment for the UK, presenting a wealth of opportunity to transform mainstream services to improve people’s lives. Now the investment has been made for 4G to become a nationwide reality, we want all organisations across all sectors to ensure the true value of 4G is realised, so that together we can make Britain truly digital.”

The real benefits will come for anyone looking at services that involve moving about large amounts of data, especially video content. From a retailer point of view, this can lead to some really rich mobile offerings around video. From a business perspective it makes mobile a better tool for shifting large amounts of data about. It also means that more and more can be done in the cloud for both consumers and the business.

Gary Calcott, Technical Marketing Manager, Progress Software explains: “I see the greatest benefit for mobile applications on a 4G network where streaming (on demand) video is required. Typically, we would expect any ‘data crunching’ in a business sense to be performed on the back-end of the application, in the Cloud.

“Applications that involve rapid exchange of large datasets will also be enhanced using 4G, ultimately providing a better user experience. ‘4G-enabled business apps’, where the state of an interaction between the mobile app and the back-end can be quickly synchronised, will also bring added benefits to businesses. Examples could include syncing a subset of a database or the state of a long-running business transaction.”

But not everyone is as positive. Many – including George Osbourne – had expected 4G to generate more revenue. EE’s early roll out of 4G using existing spectrum has not seen the kind of take up the industry was expecting and it has cut its charges twice since the launch at the tail end of last year.

And businesses aren’t so sure either. The Forum of Private Business says recent research it carried out amongst small business showed few willing to invest in 4G technology.

The research was part of an investigation into the way small businesses use technology, and if or how they plan to use future technologies such as super-fast broadband and 4G to help them trade more profitably.

The research showed when it came to investing in technology most firms (35%) were actually looking to spend on existing systems to get them working better rather than on complete new systems. A significant 31% were not looking to invest at all in the coming year.

It also found that almost half (44%) of businesses felt 4G mobile technology would have only a slight effect on the way businesses operate, with just 4% of the opinion it would be significant. A significant number at 34% felt it would make no difference.

“We’re really not too surprised with the news 4G is proving to be something of damp squib,” said the Forum’s Head of Policy, Alex Jackman. “Our own research with our members shows most businesses have little appetite for the technology at present, many unable to see how it can help their business for the costs involved.

“4G is still in its infancy though, and we think most firms will be taking the ‘wait and see’ approach. That is waiting for the price to come down and for coverage to be extended, and seeing if it can help their businesses in any way. At the minute it seems many in the UK have yet to be convinced,” he adds.

The current crop of operators who have bought licences have also viewed 4G with caution. According to Victor Basta, managing director of Magister Advisors: “The disappointing revenues from the 4G auction, well below Government forecasts, are a reflection of the challenges that mobile operators face in growing revenues from their users in the social media age. Data-heavy social media services are causing huge growth in data traffic across mobile networks. Mobile operators increasingly find themselves in a role that is about supporting end users’ social networking habits, with little, if any, commercial benefit. Social networking has effectively turning mobile network operators into digital drug mules.”

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