29 October 2012 Last updated at 20:11 ET

UK's first 4G mobile service launched in 11 cities by EE

 

Rory Cellan-Jones speed tests the new 4G service in Manchester

The UK's first major fourth generation (4G) mobile service has gone live in 11 cities.

London, Manchester, Bristol, Birmingham, Cardiff, Edinburgh, Leeds, Liverpool, Sheffield, Glasgow and Southampton will have access to network EE's 4G from Tuesday morning.

Other mobile networks will not be able to offer 4G until next year.

Critics have questioned the service's affordability - particularly with regard to data usage allowance.

Belfast, Derby, Hull, Newcastle and Nottingham will be active by Christmas, the company said.

Network EE, formerly known as Everything, Everywhere and which owns Orange and T-Mobile in the UK, has promised speeds of between 8 to 12Mbps - up to five times faster than third generation mobile technology, known as 3G.

The extra speed and capacity allows for high-quality streaming of audio, video and other content while on the move.

The company said as well as giving customers faster internet, 4G would also be of big benefit to businesses.

All-you-can-eat world

However, such benefits come at a cost - the entry tariff of £36 per month includes 500MB of data, beyond which an add-on cost must be paid if the user wishes to carry on using the internet on their mobile.

An hour of streaming a programme using, for example, the BBC iPlayer mobile app, can use up to 225MB - almost half the entry level tariff's data allowance limit.

The add-on costs for extra data begins at £3 for 50MB, and extends to £20 for 4GB.

The company's top tariff for standard customers will cost £56 per month, and has a data allowance of 8GB.

EE boss Olaf Swantee has said that the pricing is based on "months of consumer research" and that the tariffs have been priced at "the sweet spot".

But Matthew Howett, a regulation analyst at Ovum, said EE has a challenge in convincing consumers their 4G is good value for money.

"It's fair to say that EE has attracted a fair degree of criticism not so much for the price of the 4G tariffs, but rather on the amount of data bundled at each level," he said.

"EE was always going to have a difficult role to play being the first mover.

"However, its peers may be grateful for attempting to move away from an all-you-can-eat world for data to an attempt to monetise it.

EE boss Olaf Swantee says his company has hit the "sweet spot" with their pricing

"Too quickly data became commoditised for operators once smartphones and other connected devices proliferated."

User poaching

A successful 4G launch is seen as critical for EE if it is to poach customers from other networks.

EE was granted its headstart in the 4G market last month when it was given permission to run the next-generation service using its existing bandwidth.

Its competitors are unable to offer 4G until the conclusion of a spectrum auction scheduled for early next year.

The auction will determine how newly available signal spectrum will be offered to the other networks.

The process had been continually delayed by a combination of factors, from a change of government to threats of legal action from operators.

On 2 October, O2 and Vodafone agreed not to take legal action against EE, and instead settled for assurances that the process of launching their own 4G services would be sped up.

But since EE's 4G announcement, rival networks have sought to undermine the firm's offering.

In a statement on its website, Vodafone underlined what it saw as a weakness in EE's 4G - indoor coverage.

"Indoor coverage matters," the company wrote.

"That's why we've made a commitment to provide 98% indoor coverage.

"The reason we can do this is because we intend to use 800MHz frequency. Without getting too technical, this means your signal travels further into your home than any 4G signal that's available now, all things being equal."