New breed of superfast mobile phones will be available by Christmas

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A "superfast" mobile phone network that allows users to watch live television seamlessly and download films in minutes will be available to 20 million people by Christmas, it was announced yesterday.

In a surprise move, Everything Everywhere, the parent company of Orange and T-Mobile, said it had switched on its fourth generation of mobile phone networks, 4G, in certain parts of the country, well head of rivals O2 and 3.

Engineers were already carrying out tests on the network yesterday, and the company said 16 cities, including London, Birmingham, Bristol and Cardiff, would be connected within months, ushering in "a new era in communications".

Everything Everywhere claims the new network, which it will operate under a new brand called EE, will be five times faster than the quickest phone network available in the UK, 3G. It will allow people on the go – and at home and work – uninterrupted fast access to the internet, allowing the downloading of high-definition movies in minutes and television to be streamed without buffering. Existing Orange and T-Mobile customers and subscribers to other networks will have to buy a new handset to use the service. The firm did not say how much those packages would cost, but announced the eight handsets available: the Samsung Galaxy SIII LTE, other smartphones by Nokia, Taiwan's HTC and China's Huawei, and "one more to come," thought to be iPhone 5 – which is expected to be launched by Apple's chief executive Tim Cook in San Francisco today.

Devices yet to be launched will allow other equipment, such as laptops, to be connected to 4G.

Its launch is likely to enrage competitors including Vodafone, 3 and O2, which threatened legal action last month over the telecoms regulator Ofcom's decision to allow Everything Everywhere to launch 4G on its existing network.

Four cities – London, Bristol, Cardiff and Birmingham – were "switched on" yesterday but testing means the public is unlikely to be able to plug into it for weeks.

EE gave no specific date but said customers in Belfast, Birmingham, Bristol, Cardiff, Derby, Edinburgh, Glasgow, Hull, Leeds, Liverpool, London, Manchester, Newcastle, Nottingham, Sheffield and Southampton – a combined population of 20 million – would be able to use 4G by Christmas

The group plans to roll out the service to further cities, towns and rural areas, covering 70 per cent of the population next year, and 98 per cent of the population by 2014.

Olaf Swantee, the chief executive of EE, said the launch would make Britain, whose 4G rollout is lagging behind countries such as the US and Germany, "more modern".

The London Mayor, Boris Johnson, speaking at the launch, said: "I barely understand it, but information will spout unstoppably from these gizmos. It will bring huge advantages to anyone who is living or working in London."

Orange and T-Mobile customers will continue to use the 2G and 3G networks. As part of the shake-up, Everything Everywhere will be rebranded EE and Orange and T-Mobile shops will be rebranded EE stores.

New iPhone 5 'could add 0.5 per cent to US GDP'

The next-generation Apple iPhone 5, due for release today, could give a significant boost to the US economy, economists believe.

Sales of the new handset could add between a quarter and a half percentage point to the country's annual growth, said Michael Ferol, the chief economist at JPMorgan.

Analysts expect Apple to sell about eight million iPhone 5s this year. They reportedly have larger screens than previous iPhones, but are thinner and lighter. They could go on sale in Britain by the end of this month.