Ofcom finalises rules for UK auction of 800MHz and 2.6GHz spectrum

UK telecoms regulator has set a reserved price of £1.3bn for the combined spectrum; applications being in December, bidding in January 2013 with winners informed of what they have won and its cost in February or March

Ofcom finalises rules for UK auction of 800MHz and 2.6GHz spectrum

Ofcom has today published final regulations and a timetable for the 4G mobile spectrum auction – the largest ever sale of mobile airwaves in the UK.

This new spectrum will be used to deliver superfast 4G mobile services to people in cities, towns and villages across the UK and will almost double the amount of airwaves currently available to smartphones and tablets that use 3G networks.

The rules set out in detail the process involved in the auction – from applying to take part, through to bidding and finally issuing the licences to use the spectrum. Ofcom has also today confirmed reserve prices for the different lots of spectrum on offer and outlines the timetable for the auction process.

Ed Richards, Ofcom Chief Executive, said: ‘Today marks an important shift from preparation to the delivery of the auction, which will see widespread 4G mobile services from a range of providers. The entire industry is now focused on the auction itself, with a shared goal of delivering new and improved mobile services for consumers.

Reserve prices

Ofcom has confirmed the reserve prices for the spectrum that is being auctioned. The combined total is £1.3 billion. However, the industry expects the final price to be much higher than this. 

Simon Harris, director in PwC's valuations team, commented: ‘The reserve prices implemented will generate at least £1.3bn for the Exchequer from the auction, but we expect demand for this prime real estate of the airwaves to drive prices up to £2bn - £4bn. The desire for sub 1GHz spectrum is likely to be a key driver of competitive tension.’ 

Application date set

Ofcom has also announced 11 December as the provisional date for the submission of applications by prospective bidders. Ofcom will confirm the date in two weeks time, once the regulations have come into force.

Timetable for auction

11 December: The application day - prospective bidders submit their applications to Ofcom together with an initial deposit.
December: Qualification stage - applications are reviewed to determine who can go on to bid in the auction.
January: The principal stage - bidding begins. This could take a number of weeks. Bids will be placed online over secure internet connections, using software that has been developed specifically for the auction.
February/March: The assignment stage - bidders informed what they have won and its cost.
February/March: The grant stage - licence fees are paid and licences granted.
May/June: New 4G services launched  - 4G services expected to go live from a range of providers.

What to expect from 4G

4G services should make it much quicker to surf the web on mobiles – speeds will be nearer to what is currently experienced with home broadband. Because of this, 4G is ideally suited for high-bandwidth data services such as streaming high-quality video, watching live TV and downloading large files.

For the typical user, download speeds of initial 4G networks could be around 5-7 times those for existing 3G networks. This means a music album taking 20 minutes to download on a 3G phone and just over three minutes on 4G. This is based on existing 3G speeds being 1 Mbit/s on average and 4G speed being 6 Mbit/s (on average between 5 and 7 times faster).

4G services in the UK

Some 4G services already exist in the UK after Ofcom approved an application by the mobile phone operator Everything Everywhere (EE) to use its existing 1800 MHz spectrum to deliver 4G services in August 2012. EE launched a commercial 4G service in some areas of the UK on 30 October 2012. 

Brian Potterill, director in PwC's telecoms strategy team, said: ‘Despite the differences in opinion expressed during this debate, all parties will share some relief that this auction is now finally going to happen and we can move on to enjoying the benefits of competition in 4G services.’ 

Written by Wireless magazine
Wireless magazine

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