O2 4G mobile network launch date announced for the UK

O2 logo O2 has beaten Vodafone and Three to revealing a 4G network launch date in the UK

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O2 has announced that its 4G mobile network is set to launch on 29 August.

The service - offering higher mobile data speeds than 3G - will initially be available in London, Leeds and Bradford.

O2 said it planned to extend the service to a further 10 cities by the year's end.

It will compete against EE, which is already offering 4G data to 95 cities and has a cheaper basic tariff than O2's lowest-cost option.

O2 - which is owned by Spain's Telefonica - has said that its basic 4G tariff would cost £26 a month.

By contrast EE's cheapest rate is £21 a month for voice and data, or £15 a month for just data. However, until O2 reveals what its cheapest rate includes it is not possible to compare the offers properly.

Telefonica UK's chief executive, Ronan Dunne, said that his firm intended to match EE's launch speeds. But he acknowledged that his network would be slower, at least initially, in areas where his rival had subsequently installed "double speed" 4G equipment.

He also confirmed that unlike EE, O2's 4G network would not be compatible with Apple's iPhone 5, but said he "would be frankly gobsmacked if their roadmap didn't address that issue".

Vodafone and Three have also said they intend to launch 4G services before the end of the year but have not given dates.

BT - the other winner of February's spectrum auction - has said it plans to use its frequencies to let broadband customers connect kit to their internet routers via 4G as an alternative to wi-fi, and has no plans to compete directly with the mobile networks.

Buffer killer

Switching to a 4G network offers subscribers the chance to download movies, music, apps and other content several times faster than is possible on 3G.

It can also reduce the risk of streamed video or interactive games freezing due to buffering, and allows higher-quality video calls.

4G compatible smartphones O2 says customers owning a 4G-compatible phone can switch without affecting their upgrade rights

Taking advantage of all this will encourage subscribers to use more data. O2 has confirmed that like EE, it will charge higher prices for bigger data caps and not offer an "unlimited" option.

But Mr Dunne hinted that his firm would try to distinguish itself from others by offering bundled media content.

He said consumers who bought a tariff directly from O2 would get a year's "free music content", but would not reveal what that involved at this stage. He added there were also further announcements to come about gaming.

He said that subscribers who switched to a 4G contract but did not ask for a new handset would not affect when they qualified for a later upgrade. They can also get the required new Sim cards for free but will need to pay a higher tariff after the move.

By contrast, Three has said it will offer its customers 4G at no extra charge and without the need for a new Sim.

O2 says its network will cover areas housing five million people at launch, and it plans to increase that number by about two million people a week.

The other cities it wants to cover by the end of the year are Birmingham, Newcastle, Glasgow, Liverpool, Nottingham, Leicester, Coventry, Sheffield, Manchester and Edinburgh. It aims to reach 98% of the population by the end of 2015 - two years earlier than the deadline set by regulator Ofcom.

'Tricky situation'

Telefonica paid £550m for O2's 4G licences, which will use the 800MHz part of the radio spectrum.

That was less than the amounts EE and Vodafone invested. However, they also purchased 2.6GHz frequencies in addition to 800MHz bands.

The 800MHz bands are better at providing long-distance and indoor coverage, while 2.6GHz is capable of higher speeds.

Galaxy S4 and iPhone 5 Apple's iPhone 5 is not compatible with the 800MHz spectrum, but Samsung's Galaxy S4 can use it

One expert suggested O2's failure to secure a mix could put it at a disadvantage in densely populated towns and cities.

"It's not just about speed issue but also capacity," said Matthew Howett, an analyst at the telecoms consultancy Ovum.

"The higher frequency spectrum effectively has fatter pipes - you can get more data through them.

"When lots of people are using 4G to do things like streaming high definition video, it's important not just to have the availability of the signal but also that the pipe is wide enough to carry all that traffic. Without 2.6GHz O2 is in a bit of a tricky situation."

One option might be for the firm to pay BT for some of its capacity, but Mr Dunne said "there haven't been and there are no discussions on that".

Another might be for it to carry out a process called "refarming" which would see O2 free up some of the frequencies it currently uses to transmit 3G data and use them to provide added 4G capacity.

The firm's 3G service would in turn take up bands currently used by its older and less-used 2G network. However, Mr Howett warned that this could take years to accomplish.

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