Apple's iPhone 5 a mixed bag for European operators

Spotty availability of LTE at 1800MHz has made some operators winners and some losers

Deutsche Telekom in Germany and EE in the U.K. stand to gain from Apple's decision to support only one European LTE band, 1800MHz, on the iPhone 5, while Vodafone is on the losing end in both countries.

Along with a bigger screen and a faster processor, support for LTE is one of the most important hardware upgrades Apple has added to the iPhone 5, which was announced on Wednesday at an event in San Francisco.

But as it has in the past, Apple does things its own way.

In Europe, mainly three bands are used for LTE: 800MHz, 1800MHz and 2600MHz. While Samsung Electronics has introduced a Euro-friendly version of the Galaxy S III -- the new iPhone's most potent competitor -- that has all three bands, Apple decided to implement only 1800MHz, and instead focus its development efforts on enabling multiple U.S. and Asian bands.

That decision will have an impact on operators across the continent in the short term, especially in Germany and the U.K.

In Germany, Deutsche Telekom is the only German operator with an existing 1800MHz LTE footprint, currently in 50 cities, with 100 planned at the end of the year, according to J.P. Morgan Cazenove.

In the U.K, EE -- which is a joint venture between Orange and T-Mobile, and was previously known as Everything Everywhere -- will use the spectrum band to roll out a network in 16 cities by Christmas, it said on Tuesday.

Other operators in those countries, including Vodafone and Telefonica O2, will have to rely on their 3G networks when selling the new iPhone, which luckily for them also supports HSPA+ at 42M bps.

"Lets not overstate this too much. Those operators will all have the iPhone 5, but what it will allow EE and Deutsche Telekom to do in the U.K. and Germany is market their iPhone as the fastest iPhone available," said Ben Wood, director of research at CCS Insight.

That is not as good as having exclusive access to the iPhone, but it will help them stand out in a very homogenous market, according to Wood.

One challenge for EE and Deutsche Telekom will be to teach users what 4G and LTE is in a way that will benefit them.

Forty-six percent of iPhone 4 users believe that they already have 4G, according to market research company Analysys Mason. The question is how you convince those customers to buy an LTE contract, it said.

Still, if Apple were to choose just one band for European networks, 1800MHz is a good from a performance point of view.

The band offers significantly better geographic and in-building coverage than the 2600MHz band. LTE at 1800MHz provides twice as much coverage per base station as LTE at 2600MHz, according to tests by Finnish operator Elisa and referenced in a report by GSM Association.

However, not all LTE networks on the 1800MHz band are created equally. The real-world speed in a wireless network depends on a number of different factors, but at its core the speed is dependent on the amount of spectrum used.

The current iteration of LTE needs 20MHz for download traffic and 20MHz for upload traffic to get maximum performance.

But EE and U.S. operators like Verizon Wireless only use half that much, so iPhone 5 users on those networks will only get half the potential bandwidth. That compares to the 26000MHz band, which may not have the same indoor coverage, but has room for operators to really let LTE fly.

These bandwidth issues will be resolved, according to Wood. The next version of the iPhone will have support for more LTE bands, he said.

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