European Communications

Last update12:42:18 PM

Saga of UK’s 4G spectrum auction continues

The UK’s long-awaited 4G spectrum auction will take place in Q4 this year, but the exact details remain up in the air as the national regulator launched a second consultation today.

Ofcom said the consultation would last for a further 10 weeks before a final decision on the auction’s “design” is made in the summer.

Ed Richards, Ofcom’s CEO, said the announcement was “a crucial step in preparing for the most significant spectrum release in the UK for many years”.

However, as everyone is aware, operators are champing at the bit to get the auction underway.

Everything Everywhere, for example, told European Communications in early December that it wanted it to happen “as soon as possible”.

In an attempt to appease operators, Ofcom has announced three proposals that go some way to finalising how the auction will look:

  • To increase coverage of the UK population to at least 98 percent in the 800MHz band (up from the previously announced 95 percent).
  • To commit to giving sufficient spectrum to four mobile operators.
  • To reserve some spectrum in the 2.6GHz band to be shared by a group of companies to deliver innovative new mobile services for consumers, such as local mobile networks for student campuses, hospitals or commercial offices.

The regulator has put forward two options to enable 98 percent coverage: first, a blanket obligation to provide the new figure; second, a requirement to provide 4G coverage that not only matches existing 2G coverage but also extends into mobile “not spot” areas of the UK.

Key to both is the UK government’s October announcement that it is to invest £150 million to boost mobile coverage in areas with poor or no mobile service.

According to Ofcom, a significant part of this money is likely to be spent on building new mobile infrastructure in areas where there is little or no commercial incentive for operators to do so.

However, the regulator suggests the second option is “potentially more effective”.

On the competition front, the clear winner seems to be the UK’s fourth largest operator Three.

“It is clear that Ofcom continues to value Three’s disruptive nature and wants, in effect, to guarantee its existence post-auction,” commented Ovum’s Matthew Howett.

There is also an update on Everything Everywhere’s position.

Ofcom said it no longer considered the difference between 800MHz and 1800MHz, which EE holds a large quantity of, was “sufficiently important” to require special dispensation for the T-Mobile/Orange joint venture.

“Ofcom has recognised the attractiveness of the 1800MHz band in that it offers a nice balance between coverage and capacity,” said Howett.

However, the analyst added that things could change again if, as it is required to do by the EU, EE divests its 1800MHz before the auction. As we report today, there is speculation that EE could begin a sale process as early as next week.

This naturally complicates the auction process, but all signs point to a successful conclusion at the end of the year, even if it has taken longer than many would have liked.

However, Howett suggests the regulator should be given credit: “Ofcom has essentially been stuck between a rock and a hard place. It wants to award these frequencies as quickly as possible to the benefit of consumers, but also wants to ensure that they do so in a competitive way,” he said.

“Striking a balance was never going to be easy. The set of proposals now on the table appear to leave everyone with something to be optimistic about, but at the same time requires compromises to be made. Perhaps Ofcom have got it right?”

Click here to take our new quarterly survey on customer experience.