The long process of shifting Ireland towards next generation mobile services finally came to a tipping point last week with the announcement by the Communications Regulator that it had allocated new space on the spectrum to Ireland’s mobile operators.
It has been a four-year slog for the regulator and the networks, during which Ireland has been in danger of falling behind again in the telecoms market. 4G services have already been rolled out in other European countries, including Germany, Spain, Italy and, most recently, Britain.
Last week, ComReg revealed the results of its multiband auction, which saw blocks of spectrum in the 800MHz, 900Mhz and 1800Mhz bands sold off to the four mobile companies, which paid between €51.5 million and €140 million for the privilege.
The licences were awarded over two timeframes, with the longest running until 2030.
But what does the new spectrum actually mean for consumers and businesses?
The bottom line is that it will see improved service for Irish mobile users and mobile internet subscribers, both on 3G and on the next generation of mobile services in the coming months.
For LTE services, it adds up to faster broadband speed. This opens the way for services that are dependent on high-speed data such as video and online gaming to be used across mobile services.
“Upload speeds, in particular, are going to be radically improved,” Vodafone’s Paul Ryan said. “That will change user experience. In the past, as the internet developed it was about download speed; this is about download and upload.”
It’s a significant investment for each of the mobile companies. Aside from the upfront costs, which totalled €482 million in aggregate, each network will have to pay a certain amount every year to use the spectrum, netting the exchequer €373 million in fees over the 17-year period, according to today’s calculations – well ahead of pre-auction guesstimates.
Those payments are in addition to the money each network will have to invest in upgrading its infrastructure throughout Ireland to ensure it meets minimum targets laid down by the regulator – 70 per cent of population coverage within three years.
Plans are already under way among Ireland’s mobile providers. O2 has announced that it will invest €200 million in upgrading its network across the State. The 3 network said it would do the same, while it also has a site-sharing agreement with Vodafone, increasing its site numbers and boosting its coverage. 3’s chief technology officer, David Hennessy, said the combination of the two would offer a “drastic” improvement to the network.
Vodafone, meanwhile, has earmarked investment of €500 million in the coming years to bring its network up to speed, and says work has already begun.
Eircom, which owns Meteor and eMobile, is viewing the spectrum as part of a €1.5 billion investment in its network infrastructure, which includes fibre connectivity. The mobile portion is €300 million.
The news that there were no new entrants to the market may have come as a surprise to some industry watchers but it turned out to be a boon for the mobile operators already in the market, leaving them more spectrum to buy up for their own purposes.
Boost coverage
The 800 MHz band, freed up by the analogue television switch-off in October, is playing an important role in improving the networks’ services. Lower frequencies tend to travel better through walls, for example, allowing networks to boost coverage indoors.
Meteor, Vodafone and Telefónica Ireland (O2) all opted for the 800MHz band, with Telefonica’s Fergal McCann describing it as the most valuable in terms of increasing the service’s reach into the country.
“We set out to do two things. First, to protect our existing service on GSM. This auction is probably different from others around Europe where existing services certainly for the three incumbents were potentially at risk if we didn’t secure the relevant spectrum for that. And obviously is was critical in terms of getting LTE spectrum.”
3 Ireland was in a slightly different position from its rivals. It has never supported the older 2G networks, as it entered the market with a data-enabled 3G network in 2005.
“All the spectrum we were getting was just new spectrum for us, so we could just target our LTE around 1800 MHz and get on with it, said David Hennessy.
Instead, it opted for the 900 MHz block to boost its 3G coverage around the State.
The new plans represent a significant commitment to the Irish market by each of the companies but there are a few limitations on that market which may prove a challenge to companies seeking to make a return on the investment in to the next generation of mobile services.
The size of the Irish market is a major factor. Although the State has a high rate of mobile phone use, the population size doesn’t compare with the UK or other European countries. That leaves mobile firms with only a limited number of customers to tap for revenues.
While the rise of the smartphone and the tablet device have pushed data usage at mobile networks higher, average revenues per user have, in general, been edging lower in recent years, forced down by competition among the networks.
Better deals
Consumers looking for better deals and improved services are shopping around, and discovering new services that allow cheaper calls and messaging through their mobile handsets, circumventing their mobile network’s standard charges.
Add to that the growing proliferation of wifi hotspot services around the State and it’s a difficult market for the mobile operators to tackle.
Some networks still have a significant number of pre-pay customers too, though there is evidence that the push towards smartphones is driving some of these customers onto monthly billed contracts.
“There’s been a lot of growth on our post-pay customer base over the last number of years and the driver behind that is pre- to post-migration. Customers moving from pre-pay to post-pay,” said Eircom’s chief commercial officer, Carolan Lennon. They’re moving because they want a smartphone and they want to leverage data. We expect that to continue over the next number of years. We expect post-pay as a percentage of our customer base to increase as rapidly as it is at the moment.”
What customers will want to know is exactly what these new services will cost them. None of the networks has talked about any commercial plans just yet. But if similar rollouts elsewhere are anything to go by, consumers may end up paying more for their 4G tariffs. Despite that, networks aren’t anticipating any problems with persuading customers to change over to the faster services.
“When you think back to 3G launch into the Irish market, the handsets weren’t there, the services weren’t ready,” said Eircom’s Lennon. “But now I think that all those things that are out there that people want to use, from social networking to downloading to YouTube, that’s all there and available. I think LTE and 4G can only enhance that experience for the customer. So I think the need is there.”
Vodafone’s Ryan said the company hadn’t decided on charges for its 4G plans. However, he said it was likely that more customers would move to smartphones and increase their usage.
“What I expect consumers will do is they will use more, so they will pay a bit more and get a lot more,” he said.
He also predicted that data allowances would rise in line with the new services.
LTE the next generation of mobile service
LTE, or long term evolution,refers to the next generation of mobile services, which provides fast internet access to enabled devices such as smartphones and wireless broadband modems. This sometimes referred to as 4G.
Using these networks, speeds could increase by up to 10 times that of the current 3G services.
In Europe, the bands in use include 800Mhz, 900MHz, 1800 MHz and 2.6GHz.
Originally intended as an industry standard, not all devices branded as 4G LTE will work with Ireland’s services. While the spectrum planned for here is a European standard, other territories such as the US have opted for different bands.
When the iPhone 5 was announced in September, there were concerns that its 4G capabilities wouldn’t be compatible here; however, it uses the 1800MHz band, like the fourth generation iPad and the new iPad mini.
The third generation iPad is still unable to connect to 4G networks here though. It uses the 700mhz and 2.6ghz bands, neither of which are in use for 4G services in Ireland.
