O2 says iPhone demand strained its London network

LONDON Tue Dec 29, 2009 6:07am EST

LONDON Dec 29 (Reuters) - Apple's (AAPL.O) data-hungry iPhone at times overwhelmed operator O2's network in London during the last six months but additional capacity helped ease the problem by December, O2 said on Tuesday.

O2, which is owned by Spain's Telefonica (TEF.MC), said some customers in the UK capital had periodically not been able to make or receive calls or transmit data because of pressure on the network from smartphones such as the iPhone.

O2, whose exclusive contract to market the Apple handset in the UK expired in November, had seen an 18-fold increase in data traffic since the start of the year, a spokesman said.

Chief Executive Ronan Dunne told the Financial Times on Tuesday: "Where we haven't met our own high standards then there's no question, we apologise to customers for that fact."

"But it would be wrong to say O2 has failed its customers en masse."

O2's network has suffered a spate of crashes since the summer, when it said it was seeing a huge surge in data traffic.

The company had invested 30 million pounds ($48 million) in its London network to meet demand, the spokesman said, and 200 extra mobile base stations had been installed.

O2 is not alone in finding its network stretched by iPhone users, who have some of the largest appetites for downloading applications, surfing the Internet and using email.

AT&T temporarily stopped selling the iPhone on its website to New York City residents over the weekend, causing speculation that the operator may have been trying to ease congestion on its network. [ID:nN28172210]

O2 said it did not encounter any problems over the Christmas period.

Orange, owned by France Telecom FTE.PA, started selling the phone in the UK in November, while retailer Tesco (TSCO.L) launched an iPhone service earlier this month.

Vodafone (VOD.L), the world's largest mobile operator by revenue, will join the iPhone battle in Britain and Ireland on Jan 14.

(Reporting by Paul Sandle; Editing by Erica Billingham)

($1=.6243 Pound)

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