Ofcom unveils its spectrum auction plans

Steve Dinneen
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OFCOM yesterday detailed its plans to host the largest ever auction of mobile spectrum in the first half of next year.

The watchdog has included a number of coverage conditions it says will ensure mobile broadband will reach 95 per cent of the population – the same as the current 2G network – by 2017.

It has pledged to ensure the UK’s smallest operator 3 is able to compete by imposing caps on the amount of spectrum any one firm can bid for. It will also disregard any auction outcomes in which all four firms – Vodafone, O2, Everything Everywhere and 3 – do not win a minimum amount of spectrum.

The next generation spectrum will allow networks to shoulder the burden of increased data usage by modern smartphones.

The auction is equivalent to three quarters of the current mobile spectrum in use today and a staggering 80 per cent more than the 3G auction that raised £22.5bn in 2000.

While the latest auction is unlikely to reach these dizzying heights, Simon Harris, a senior manager in the PwC telecoms team, says he still expects it to be fiercely competitive and raise up to £4bn.

Ofcom chief executive, Ed Richards, said: “The auction is not only critical to the future of the UK mobile telecommunications market but it is also of significant importance to the wider economy. It will support a wide range of data services that are fast becoming essential features of the modern world.”

The auction will sell two separate sections of spectrum. One will be the 800Mhz wavelength freed up by the switch-over to digital TV. The second will be a newly released 2.6Ghz section. The first usable 4G spectrum should become available by 2014.

Network operators have already criticised certain areas of the proposals. Everything Everywhere – formed through the merger between Orange and T-Mobile – says the cap ignores the differences between different types of spectrum and could “constrain the normal development of the market”.

A spokesman for 3 said: “The recent re-allocation of 2G spectrum has given a huge competitive advantage to Vodafone, O2 and Everything Everywhere. Ofcom’s proposals seek to rebalance this.”