Rail crash? You wait until they try to auction the 4G mobile phone spectrum

October 4, 2012

Business groups have launched  a scathing attack on the Government over the 4G spectrum auction and say it has revealed serious problems at the heart of public sector procurement. Simon Walker, director general of the Institute of Directors, expressed a typical view: “It is shocking that such a crucially important process has gone so seriously wrong. Businesses need a stable, reliable telecoms network and certainty in the provision of key infrastructure.” “Procurement mistakes increase risks for companies, threaten jobs and harm Britain’s reputation as a destination for inward investment,” added Adam Marshall, policy director of the British Chambers of Commerce.

Just joking. I’m sure Messrs Walker and Marshall will forgive me for quoting them out of context this once; after all, I’m investing them with seer-like prescience. Their cited words are real, but in fact relate to the very clear and present danger of the West Coast Main Line rail fiasco. The fallout from that will be a moon-cast shadow compared to what will happen if HMG manages to screw up the mobile phone spectrum in the same way it has screwed up our railway network.

As it happens, there has been some relatively good news on the 4G front recently. Maria Miller, the obscure former Grey advertising and PR executive recently catapulted to culture, media and sports secretary, has made a brisk start to her tenure by bringing forward the inexplicably delayed auction date of 4G spectrum to January and cutting through the legal wrangling among telecoms carriers which has deadlocked the introduction of the new, much faster, mobile phone standard to the UK.

But will her timely action be enough to avert a looming disaster? First, a little background. 4G is not some minor incremental improvement on the current standard, 3G. It can offer speeds of up to ten times that of the average current home broadband service. Data-hungry yoof, but more importantly business people and commuters, will love it. Miller herself observes that its introduction is “a key part of economic growth strategy” and will “boost the UK’s economy by around £2-3bn” (growth at last – the stuff that George Osborne’s political dreams are made of). America’s already got it, Apple’s got it, Germany’s got it, Korea’s got it. For God’s sake, Estonia’s got it. Britain, which prides itself on being at the heart of the digital revolution, has not. Why not? Because of years of government dithering over the auction structure. Gordon Brown made a bit of an idiot of himself by appearing to hand out the lucrative 3G spectrum to the telecoms carriers for a song. Successive administrations since have been determined not to make the same mistake twice, but seem uncertain how to prevent it.

Now events have caught up with them. The situation is complex, but distils down to a simple reality. Apple has launched its latest ‘must-have’ iPhone with a 4G capability that no one in the UK will be able to take advantage of in the near future. Well, almost no one. The exception: those who use EE, as of October 30th. Er, let me qualify that. No, not all users of Orange and T-Mobile, the brands which have had all their resources pooled into the Everything Everywhere receptacle (or EE, as it is now known – what a whoopee cushion of a brand name). EE itself has the exclusive iPhone 5 franchise, and only new subscribers, not old customers, will benefit from the 4G offering. Everyone else – that is, the vast majority of UK mobile phone users – will have to wait at least 8 months to subscribe.

It may well be objected that what gives the EE brand a timely ‘digital’ lift is actually brand suicide for the company’s premier and better known brand, Orange. But that’s one for UK chief executive Olaf Swantee and his strategy team to worry about. In the meantime, they can congratulate themselves on having – unlike their competitors – farmed existing spectrum to make space for the 4G platform. A merry Christmas is assured, thanks to the exclusivity of their iPhone 5 4G contract.

Once EE’s rivals, O2, Vodafone and Three, realised what Swantee was up to, cries of  “Unfair” and “Unlevel Playing Field” were heard to rend the air. EE had played the ant in Aesop’s fable, and harvested its existing resources wisely, but the grasshoppers were beside themselves with rage that they would have to wait another six months to grab their share of the new spectrum via a dilatory government auction – and then some before the service could actually be implemented. What’s more, they were prepared to act decisively: they threatened to blunt EE’s leading edge with legal action. That might have been explicable in terms of competitive advantage and buying extra time to build the necessary 4G infrastructure. But as a prelude to launching the 4G standard in the UK, it would have created a public relations disaster. How do you explain to an iPhone-crazy public that access to much higher broadband speeds is being blocked by red-tape, selfish industry interest and legal chicanery?

Miller has therefore done well to defuse the legal wrangling by agreeing to bring forward the spectrum auction date 6 months to the end of January. But implementation of the 4G dream is still a long, long, way away for most of us punters – we’re talking at least the latter end of next year. In the meantime, all sorts of teething problems will need to be sorted out: poor signal distribution, patchy network coverage, a quite possibly incompetent auction process that leads to further legal action and, let’s not forget, potentially incompatible 4G phones.

“Wrong spectrum”. We’re going to be hearing a lot of that in the next 12 months, while the phone companies sort themselves out. If my mobile phone contract were coming up for renewal (which it is not), I would be very tempted to let it ride until at least the beginning of 2014 …


iPhone 4S launch highlights flaws in Apple’s culture of secrecy

October 5, 2011

The mountain shuddered in labour – and produced a ridiculous little mouse. The mouse in question is the iPhone 4S; the mountain, the hyperbolic rumour machine which would have had us believe, until the very last moment, that Apple was in fact launching the no-doubt-iconic iPhone 5, instead of a mere upgrade.

If the result has been widespread disappointment, the secretive folk at Cupertino, California, have only themselves to blame for their botched PR. Journalists, rather like Nature, abhor a vacuum. And when there is only rumour to fill it – owing to Apple’s paranoid obsession with controlling every detail of a launch – this is the sort of thing that results.

As far as I can tell, the foundation of these “iPhone 5” rumours was some cryptic remarks made by former US presidential candidate Al Gore at the Discovery Invest Leadership Summit in South Africa. Gore is an Apple non-executive director (which is why he was believed) and he let slip that Apple would imminently be launching two models, dubbed the 5 and the 4.5.

I have no idea whether this was simply mischievous misinformation, or Gore himself being ill-informed and indiscreet. Believe me, the latter would not be surprising, even at board level. Apple prides itself on a degree of internal information control, policed by fear, that would have been the envy of the KGB. It’s not your job title that counts in this corporation, but how much you can reliably piece together from your internal contacts just before a big launch. Under a supremely capable autocrat like Steve Jobs, this system of divide and rule has worked well for Apple. It remains to be seen whether his successor, Tim Cook, will be equally successful in manipulating it.

Early signs are not promising. The iPhone 4S, which will appear in the UK on October 14th, may not be the great technological leap forward that was expected. But it is a useful and innovative launch whose value will probably be dissipated in the flotsam and jetsam of deflated hype.

Point one: it embodies Apple’s latest operating system, iOS 5. This, among other things, will give Apple a better handle on technical elements of its Android competition, by allowing customers to access cloud technology that dispenses with the need for desktop computers when downloading music, photos and apps. Point two: the 4S launch will now allow Apple to start offering the older 3GS phone free with a contract. By making iPhones more attractively priced at the lower end, Apple may well be able to blunt Google’s growing stranglehold on the total smartphone sector.

And not before time. Recent research released by Nielsen reveals that, within the UK market over the past 6 months, 44% of smartphone purchases were powered by Android, well ahead of RIM/Blackberry’s 25% and Apple’s 18%.

Premium pricing and its “walled garden” operating system put Apple at a disadvantage when it comes to market share. Interestingly, however, Apple products seem to inspire the most loyalty, with 86% of iPhone users saying they were “highly satisfied” compared to 74% of all smartphone users.

Which is all very well, except you’ve got to persuade the blighters to buy your product in the first place before you can inspire such laudable brand loyalty.

UPDATE 6/10/11: Appropriately, perhaps, the pithiest epitaph to Steve Jobs, who died late last night, can be found on Twitter: “Three apples changed the world. First one seduced Eve, 2nd fell on Newton and 3rd was offered to the world half bitten by Steve Jobs.” Or minor alternatives to the same effect.


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