The adage in mobile for a long time has been straightforward: Europe leads, America lags. Customers on either side of the Atlantic seemed to be living on different planets, with those in Germany, Britain and France talking about blisteringly fast data and the ubiquity of SMS, while their American cousins existed in a world dominated by tallest dwarf discussions — networks besting each other over which of them dropped the fewest calls.
Just because something was true once, however, doesn’t mean it has to stay that way. These day, the comparisons between U.S. and Europe are more complicated than ever, and nowhere is it more obvious than in the case of 4G networks.
American operators such as Sprint and AT&T, have already rolled next-generation coverage in major cities such as Chicago, Dallas and Boston, while here in Europe, we’re twiddling our thumbs.
To give you an example of how far behind the curve Europe is on 4G, it was only this week that the bids were officially opened in Italy’s 4G spectrum auctions, with some of the country’s biggest operators — such as Vodafone, Wind and Tim — all competing for six available slots. The government said it expected bidding to reach €3 billion ($4.3 billion USD), but there’s no guarantee that it will.
Elsewhere, things are little better. Germany’s auctions took place last year, raising €4.4 billion, while deals in Sweden and the Netherlands were significantly smaller (in fact, Dutch operators paid just $2.6 million for the rights to operate 4G networks there). Meanwhile, bidding is currently open in France; the U.K. plans to hold its sale next year; and countries like Ireland are still in the process of drafting the terms of their sales.
The reality of all this is that 4G won’t be commonplace across Europe for years, despite extensive field trials and experimentation from operators.
Why so slow?
There are plenty of reasons that European have been conservative on 4G. Some are relatively positive: 3G service is much more broadly available across the continent, even if consumers aren’t always happy with it. Home broadband speeds are much higher too, which takes the pressure off in some cases. (One reason 4G has been pushed hard is that it helps operators reach rural areas they find difficult to serve otherwise.)
But a large part of the European operators’ reticence is the result of having been stung before. The 3G auctions, held a decade ago, saw them spend vast amounts of money with little success. At the start of the century, the approach to this new technology was radically different depending on where you lived.
In America, networks had shied away from bidding. Operators across Europe, meanwhile, went crazy and spent in excess of $100 billion to access 3G spectrum around the continent. It proved vastly over-valued, sparking a crash in the market. Some waited for years to begin rolling out services which, in many cases, never really delivered the blistering speeds or broad coverage that consumers wanted. Saddled with huge bills and faced with challenging numbers, it’s no surprise that they are less excited about 4G — particularly in the wake of a wider financial meltdown.
In some places, the fear of repeating history with 4G has become endemic. In fact, Italian ministers had been so concerned that the auction would flop that they inserted a special clause in the law that would have cut spending at various ministries if the bids were not as high as expected.
But whether or not the bidding is more rational this time, the end result is the same: America is now in the process of leapfrogging Europe in an important aspect of mobile — and consumers could end up paying the price for mistakes made a decade ago.