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UK Mobile Spectrum Auction

24 March 2011

The UK regulator Ofcom is planning what it calls "the UK's largest single auction of additional spectrum for mobile services." Ofcom released a consultation on March 22, as well as a news release entitled "Ofcom prepares for 4G mobile auction." Comments are due on May 31.

By Gerry Oberst in Brussels and Conor Ward in London.

The UK regulator Ofcom is planning what it calls “the UK’s largest single auction of additional spectrum for mobile services.” Ofcom released a consultation on March 22, as well as a news release entitled “Ofcom prepares for 4G mobile auction.” Comments are due on May 31.

The award will consist of a total of 250 MHz of spectrum - 80% more than was awarded in the 3G auctions - and will allow mobile network operators to provide next generation 4G (LTE and WiMAX) mobile broadband services.  The 2.6Ghz band will be reserved (prior to the final award) for use by wireless cameras during the 2012 Olympics.

The rights concerned will enable connection at higher speeds, in some cases about 25 times quicker than average broadband connections now in use. The UK was one of the first countries to auction 3G spectrum over a decade ago which raised some £22 billion. However, it has fallen behind some other countries such as the US and Germany where 4G has been introduced or auctioned.

The 4G auctions must also be seen in the context of wider spectrum liberalisation, which involve the removal of technology restrictions on spectrum to enable more efficient use. For example, Ofcom has recently allowed operators to 'refarm' or re-deploy low frequency spectrum that they had been allocated when mobile networks were originally established for other uses with more advanced technology. H3G and Everything Everywhere argued that this gave the longer established networks an advantage in the run up to the 4G auction. 

Ofcom has expressed concerns as to the competition implications of the award of the spectrum and has thus proposed that the spectrum be split among at least four national wholesalers, each with the minimum bandwidth necessary to credibly supply high quality mobile broadband services. It has also proposed that a cap be placed on the amount of spectrum which can be awarded to each participant. It is therefore likely that each of the UK's four mobile network operators (Everything Everywhere, H3G, O2 and Vodafone) is likely to participate in the award.

In the run-up to the auction, bidders will no doubt be considering their options and optimal strategies. These will be informed by: (i) review of regulator and government consultations; (ii) development of legal and economic arguments to support submissions and bids; (iii) technical and commercial assessments including analysis of interference and achieving coverage obligations; and (iv) bid valuation including the relative value at different bands and for different amounts of spectrum.

 

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