Why BT should bid for a 4G mobile licence

Ofcom’s proposals to auction frequencies in the 800MHz and 2.6GHz frequency bands seem tailor-made to attract BT back to the mobile market.
Firstly, Ofcom says it wants a fourth operator. It had four, but then Deutsche Telekon and France Telecom merged their struggling UK operations, T-Mobile and Orange respectively, into Everything Everywhere, but kept the names for branding purposes. This was making it easy to squeeze Three, which has its own small 3G network, but depends on sharing the Everything Everywhere network for much of its traffic.
Secondly, Ofcom says explicitly it will reserve a licence in the 800MHz band for an operator that promises to cover 95% of the population by 2017. Curiously enough, this is the same deadline as the government’s smart meter project, which will depend on the use of 800MHz signals to penetrate buildings and to travel long distances.It is also the same percentage that BT CEO Ian Livingston promises to cover if, and only if, the government gives it most of the £830m earmarked for rural broadband networks.
Without access to mobile spectrum BT would have to depend on a friendly mobile partner if it wanted to pitch for the smart meter (and later smart grid) business. Of course, it could hook up the telephone line to the meters, but no-one is thinking that way, and besides, why else did it tie up with broadcast signal distributor Arqiva?
And it would open up competition for the end user for the first time in Market 1 areas, the two-thirds of the exchange areas around the country where it is sole supplier, assuming another operator accepted the deadline.(See the map here: WBA map final.pdf.) BT objects to this characterisation, noting that while two-thirds of the the country’s exchanges are in Market 1 areas, this covers only 11.7% of the population.
Those are two powerful reasons, one defensive of its market position in rural areas, the other to improve its competitive position, are why BT should bid for the 800MHz licence.
But really, why bother with the auction? Ofcom has so hedged the auction with restrictions on the amount of spectrum an operator can own that it might as well give it away in return for a very aggressive network build deadline.
That at least would have the benefit of getting the UK quickly up speed with Uzbekistan.

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