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Speed v cost: the mobile net dilemma

Vodafone and O2 have launched their 4G services to much fanfare. But should we believe the hype, wonders Oscar Williams-Grut

Super-fast mobile internet has officially arrived amid a fanfare of pop concerts, parties and photo-ops. Vodafone and O2 both launched their 4G mobile networks last week, joining rival mobile operator EE which had monopolised the service since October.

Three, meanwhile, announced plans to launch its 4G network in December, while BT, the final company to win space on the 4G spectrum during last year's auction, is still considering its options.

4G, which stands for fourth generation, gives subscribers access to mobile internet at speeds of 8-12 megabytes a second, comparable with home broadband services and up to six times faster than 3G, the mobile internet network that has operated since 2003.

All the providers are aiming to have their networks covering 98% of the UK by the end of 2015. EE, meanwhile, has made the most of its head-start and announced that its 4G network will reach almost all of the UK by the end of next year.

Known technically as Long Term Evolution, or LTE, 4G is a way of accessing the internet wirelessly at faster speeds than previously available, on a mobile, tablet or via a dongle.

Those who stand to benefit most from the new network are those living in rural areas who have suffered without fast internet – either because of distance, or cost.

But speed alone may not be enough to woo customers.

James Barford, a telecoms analyst at Enders Analysis, said: "All of the operators are struggling to sell the advantages because it's thousands of little things, as opposed to one big thing. The big revolution was the smartphone revolution and broadly this is more of the same.

"4G allows a faster experience, which you'll probably only notice on the most modern handsets."

A survey by Ofcom earlier this year found 36% of people wouldn't upgrade to 4G once their contract ran out, while 34% had no opinion.

The operators are attempting to lure subscribers with different add-ons to take advantage of 4G: Vodafone is offering free access to either the online music service Spotify Premium, or to Sky Sports Mobile, while EE has its own mobile film and TV store and O2 has introduced a music-streaming service.

However, Steven Hartley, at the telecoms consultancy Ovum, also thinks cost could be a barrier. Packages currently on offer start from £21 a month, which Mr Hartley thinks is too high given the lack of obvious benefits.

"They've got the LTE business case the wrong way round for me," he said. "Launching a LTE network, it's not about charging a premium and trying to make extra money, it's more about being able to transfer much more data more cost-effectively."

4G networks allow operators to better cope with the growing flood of data being transferred and also save on costs. The US, Japan, Australia and South Korea have all already adopted 4G to cope with data volumes.

Operators are also keen to avoid a repeat of the launch of 3G, which led to massive writedowns as people failed to sign up at the rate predicted. But Steven Hartley thinks it's unlikely operators will be stung by 4G.

"We've got established demand," he says. "You've only got to look at smartphone penetration to see that people use mobile internet."

While the number of consumers it appeals to might be limited for now, as the service rolls out and prices fall, 4G seems set to become the backbone for future mobile use.

Until the even-faster 5G network, offering 1GB a second, is rolled out, that is.

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