This morning, Dow Jones ran a story looking at how Ofcom’s upcoming 4G spectrum auction is going to provide the U.K. with improved “broadband speeds, boost the economy and create thousands of jobs.”
In support of why the 4G spectrum auction was needed, they highlighted:
- Launch of 4G networks may up to GBP75 billion, or 0.5% to U.K. GDP by year-end 2019;
- Create or safeguard 125,000 U.K. jobs; and
- Encourage GBP5.5 billion of direct private investment in the U.K. economy by 2015.
In the story, it said that the 4G spectrum auction is necessary since mobile data demand in Western Europe is expected to increase by more than six times within the next five years.
It was a great story and I wish Ofcom and the U.K. providers the best with their spectrum auction.
As I said in my blog post last week, if the spectrum crisis is fabricated, then it is a worldwide conspiracy and today’s Dow Jones piece suggests the U.K. government is involved. OK, obviously that’s a ridiculous assertion. The reality is that people want mobile access, which means demand continues to increase. In order to meet these demands, more spectrum is needed.
But I also couldn’t help but notice some significant differences between the U.K. and the U.S. wireless industries and our customers.
- The U.K. doesn’t have 4G networks yet. Not only has the U.S. been rolling out 4G services in the last few years, we have more than 87% of the LTE subscribers in the world.
- Continued 4G rollout in the U.S., according to a study from Deloitte, could mean $25-53 billion in network investment; create 371,000-771,000 jobs and GDP growth between $73 billion-$151 billion for the U.S. by 2016.
- U.S. has more four times as many subscribers (322.8 million) as the U.K. (75.7 million).
- U.S. subscribers use more than 777 minutes per month for an average revenue per minute of $0.03 while the U.K. uses only 196 minutes per month for an average revenue per minute of $0.10. This brings to mind the George Bernard Shaw quote about the U.S. and England being two countries separated by a common language. But at 1/3 the cost, it’s not a surprise that we talk more than they do!
- Despite having more subscribers who use more minutes at a lower cost, the U.S has only 409.5 MHz of spectrum for commercial use while the U.K. has 375 MHz.
- Yet the U.K. has 310 MHz of spectrum already in the pipeline (which includes the 4G spectrum), while the U.S. has only 50 MHz.
So even though the U.S. has more users, who are using more and projected to use even more than current figures, we have significantly less spectrum in the pipeline than the U.K. (as well as other OECD countries).
To those who continue to spout the spectrum crisis is fabricated, it’s time to stop behaving like ostriches and sticking your heads in the sand. Instead, let’s work together with the FCC, NTIA, Congress and other interested parties to get more spectrum to market. It’s good for the industry, but more importantly, it’s good for our consumers and the economy.