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Three starts 4G price war in UK before auction is over

UK's smallest operators promises its 4G services will come as standard

The auction of 4G licenses in the 800MHz and 2.6GHz spectrum bands is still under way in the UK, but mobile operator Three is already promising that it will offer 4G LTE services on its network at no extra charge later this year.

In a clear dig at rival operator EE, which launched its own 4G network in 2012, Three said that "unlike some other UK mobile operators," 4G LTE services will be available across all existing and new price plans without customers needing to pay a premium fee to upgrade.

"As we add the next wave of technology to our Ultrafast network, we've listened to our customers and thought long and hard about the right way to do it," said Three UK chief executive Dave Dyson in a statement.

"We don't want to limit Ultrafast services to a select few based on a premium price and we've decided our customers will get this service as standard."

When EE unveiled pricing plans for its 4G services in October 2012, some potential customers were put off by having to pay £36 for EE's most basic 4G package, which included a data allowance of just 500MB. This rose to £41 for 1GB, £46 for 3GB, £51 for 5GB and £56 for 8GB.

EE then announced in January that it was cutting the price of its basic 4G package from £36 to £31 a month for a 24-month contract (around £5 more than an equivalent 3G package from Orange or T-Mobile). The company has also launched a new plan for "super-users" offering 20GB of mobile data for £61 per month.

Ovum analyst Matthew Howett said at the time that the new plans were a pre-emptive strike aimed at EE's competitors, which will soon launch their own tariffs once the auction of 4G licences is completed.

However, there is no guarantee that Three will win any 4G spectrum in the auction. Ofcom has stipulated that some of the available spectrum will be reserved for a fourth national wholesaler - other than O2, Vodafone and Everything Everywhere - but has not specified who this fourth operator will be.

There are seven bidders currently competing to acquire new capacity in the 800MHz and 2.6GHz spectrum bands, so HKT UK (a subsidiary of Chinese holding company PCCW), MLL Telecom, and Niche Spectrum Ventures (a subsidiary of BT) are all in with a chance of becoming the fourth operator.

Three's statement today suggests that it is confident it will win a portion of the new spectrum. It also already owns a chunk of 1800Mhz spectrum, which it plans to incorporate into its existing network in the second half of this year.

Ofcom published proposals on Friday to liberalise all mobile licences in the 900 MHz, 1800 MHz and 2100 MHz frequency bands - previously restricted to 2G and 3G technologies - to permit the deployment of 4G services.


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