Bidders gear up for 4G auction

Ofcom has announced the bidders in the forthcoming 4G mobile spectrum auction – the largest ever sale of mobile airwaves in the UK.

The following organizations have qualified to bid in the auction, which will start in January: Everything Everywhere (UK), HKT UK (a subsidiary of PCCW), Hutchison 3G UK, MLL Telecom, Niche Spectrum Ventures (a subsidiary of BT Group plc), Telefónica UK, and Vodafone.

This new spectrum will boost the amount of airwaves available to mobile phones by more than 75 per cent and will play a critical role in helping to meet a growing demand for mobile data among consumers.

Ed Richards, Ofcom chief executive, said: “The 4G auction will be a competitive process that will dictate the shape of the UK mobile phone market for the next decade and beyond.

“New 4G services will stimulate investment, growth and innovation in the UK and deliver significant benefits to consumers in terms of better, faster and more reliable mobile broadband connections.”

Bidders will be competing for spectrum in two separate bands – 800 MHz and 2.6 GHz. The lower frequency 800 MHz band is part of the ‘digital dividend’ freed up when analogue terrestrial TV was switched off, which is ideal for widespread mobile coverage.

The higher frequency 2.6 GHz band is ideal for delivering the capacity needed to deliver faster speeds. These two bands add up to 250 MHz of additional mobile spectrum, compared to 333 MHz in use today. Both bands are being packaged into smaller lots for the auction.

Dutch results

The news follows results of the spectrum auction in the Netherlands, which raised €3.8bn and has boosted expectations for the UK auction.

Commenting on the results, Brian Potterill, director in Price Waterhouse Cooper’s telecoms strategy team, said: “In the Autumn Statement the chancellor budgeted for proceeds of £3.5bn, which is comfortably within PwC’s expected range of £2bn-£4bn. The result of the auction in the Netherlands is bound to add to confidence that the £3.5bn will be achieved.

“The high prices in the Netherlands were caused by the Government setting aside some of the most valuable 800MHz spectrum for a fourth operator. This created a squeeze which drove up prices. The UK 4G auction is designed to ensure that a fourth operator can get a credible portfolio of spectrum but doesn’t specifically set aside the valuable 800MHz, so it is unlikely that we will get the same squeezed conditions from the larger operators. However, the Netherlands result adds to the sense that mobile spectrum is increasing in value as demand for smartphones grows."

The auction will start in the UK at the end of January with results expected in early March.