UPDATE EE Confirm UK 4G Rollout Delay – Blames Ofcom Licence Fee Hike

Mobile operator EE (Everything Everywhere) has confirmed to ISPreview.co.uk that their new “superfast” 4G (LTE at 1800MHz, 800MHz and 2.6GHz) based Mobile Broadband network will not reach its originally predicted UK coverage target of 98% (population) by the end of 2014 and will instead fall short at 90%.

The Mobile Network Operator (MNO) caused a storm in 2012 by becoming the first UK provider (excluding UK Broadband Ltd.) to begin rolling out a national 4G network using Long Term Evolution (LTE) technology in the 1800MHz band. By comparison most of EE’s rivals were forced to wait for the completion of Ofcom’s 4G spectrum auction (here) and thus many of their networks didn’t go live until 8-12 months later.

The advantage was significant and crucially enabled EE to aim for 98% of the UK population to be covered by the end of 2014, which was several years ahead of the Government’s own 2017 target. Meanwhile EE’s rivals, including O2, Three UK and Vodafone, were forced to set a similar target for the end of 2015, due to their late starts.

But since the start of this year, when their 4G network coverage stood at 70% of the population, progress has appeared to slow and over the past 7 months they’ve only managed to push the figure out to 73%. EE blames the significantly slower pace on the Government and Ofcom’s threat of a massive licence fee hike.

A Spokesperson for EE told ISPreview.co.uk:

“Late last year Ofcom proposed to significantly increase the Annual Licence Fee for operators’ spectrum holdings – our own increase stands to be as much as £87 million per year. Based on this and the impact it has on investment, we’ve revised our 2014 coverage target to 90 per cent. The rollout will continue in the coming years, and we’re still targeting 98% coverage as soon as possible.”

The new fee (details here), which has widely been linked to the outcome of Ofcom’s 4G auction (i.e. the Government didn’t get as much money from that as they wanted, so this could be another way to plug the proverbial hole), reflects the 900MHz and 1800MHz bands and is several times higher than EE’s current payment. Naturally the EE and other operators aren’t very happy about it all.

In the meantime it looks as if EE has deliberately slowed their roll-out in an effort to put pressure on the Government (Vodafone have warned of a similar slowdown). But even at this reduced pace the Government’s original target to reach 98% by 2017 (at the latest) is probably still safe, not least because O2 has the crucial coverage obligation lot for 800MHz and this requires them to meet the official target (note: 3G can be used for this).

As we revealed in June EE has also delayed the commercial launch of their 300Mbps LTE-A 4G service until 2015 (here), although this probably has more to do with the lack of hardware support than Ofcom’s licence fee hike. Never the less there are only five months left of 2014 and it will take a huge surge in development for EE to reach even 90% by the end of 2014 (they have the capacity to do it if they want).

UPDATE 10:42am

EE has asked us to reflect that the comment they gave above, which arrived late yesterday afternoon in our inbox and thus before Ofcom’s announcement this morning, is not to be taken as their response to this morning’s newly revised licence fee change (they haven’t officially commented on the regulators adjusted proposals yet).

In other words it sounds as if the comment they gave to us was more a reflection of the first proposal than todays, despite the stated pricing appearing to be very similar.