Ofcom confirms 4G spectrum auction for 2012

The telecoms regulator details the auction confirming there will be room for four bidders for the 800MHz and 2.6GHz spectrum

Ofcom has released details of its long-awaited spectrum auction, which will enable mobile operators to roll-out 4G services across the UK.

The regulator confirmed the process would begin before the end of 2012 and offer the equivalent of three-quarters of the radio spectrum operators currently use for mobile services – an extra 250MHz.

Although the three main operators – Vodafone, Everything Everywhere (made up of Orange and T-Mobile) and O2 – will be likely to take the lion’s share, Ofcom has confirmed it will reserve a portion of the spectrum for a fourth operator to increase competition.

This could be bought by Three UK, Virgin Mobile or even an entirely new entrant to the market, although Three is thought to be the most likely candidate.

The spectrum on offer is at 800MHz and 2.6GHz. The lower frequency was freed up from the digital TV switchover - the lower the frequency, the better the ability for signals to pass through obstructions, such as buildings. As a result, Ofcom requires those who receive any 800MHz spectrum to provide mobile broadband coverage indoors for at least 98% of the population by 2017.

The higher 2.6GHz may not be as useful for inside buildings, but has the ability to reach much higher speeds outdoors.

Matthew Howett, practice leader of regulation and policy at analyst firm Ovum, said the focus on indoor coverage “has the added benefit of improving outdoor coverage” as a by-product but added: “However, consumers in some parts of the country may for a time only have the choice of the one provider, since no access obligation has been imposed on the winner of this licence.”

The process of releasing the spectrum and moving to the auction stage needs approval from the government. Ofcom published a draft of the legal instrument giving details of its decisions and a statutory consultation will run until 11 September 2012.

After this is completed, the application process will start, leaving the regulator to sift through the formal documents to ensure those wanting to participate are suitable candidates.

The actual bidding won’t begin until 2013, but Ofcom claimed mobile operators would be putting the new spectrum bands into use by the middle of 2013, with 4G services becoming commercially available before the year is out.

Ofcom has yet to make a decision about Everything Everywhere, which is planning to use its existing portion of 1800MHz spectrum to roll-out 4G before the auction commences. The mobile operator partnership owns 80% of the frequency band and would be able to use it straight away as it is used as the 4G frequency in a number of other countries, meaning equipment is already available for 1800MHz specifically.

The regulator has provisionally given the move the go ahead but rival operators O2 and Vodafone have claimed it would give Everything Everywhere an unfair market advantage getting 4G first, even threatening to take Ofcom to court if it allows the move.

In a statement today, Ofcom said the application was being considered “independently of the auction for new spectrum” and a decision would be made “in due course.”

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