The UK’s 4G auction for spectrum in the 800MHz and 2.6GHz band is set to take place in early 2013, UK telecoms regulator Ofcom announced.
The details of the auction process are broadly in line with proposals announced in January, although some changes…
The UK’s 4G auction for spectrum in the 800MHz and 2.6GHz band is set to take place in early 2013, UK telecoms regulator Ofcom announced.
The details of the auction process are broadly in line with proposals announced in January, although some changes were made following feedback from stakeholders over the past few months.
Ed Richards, Ofcom CEO, told journalists in a press briefing this morning that the regulator wants to ensure that four wholesalers continue to compete in the market. Therefore, spectrum will be reserved for a fourth bidder other than existing players Telefonica, Vodafone, and Everything Everywhere, the UK JV of Orange and T-Mobile. This fourth acquirer could be Hutchison 3G, which is already present in the UK market, or a new entrant altogether.
To further increase competition one of the licences in the 800MHz band will come with an obligation to cover 98% of the UK by 2017 the latest. The regulator hopes this will put pressure on other players to match this target. Richards argued that he expects availability to play a key role in competition in the future.
Winners to be revealed in March 2013
If everything goes according to schedule, the auction will take place in early 2013, and the winners will be announced in March. Operators could then roll out 4G networks from mid 2013. Prior to the actual auction a public consultation will be held on the draft legal instrument which implements auction rules. This consultation closes in mid September.
While the Ofcom CEO refused to speculate on the amount that the UK government might raise from the auction, Simon Harris, director in PwC’s valuations team, said he did expect a competitive process following the latest revisions of the auction details. “The reserve prices implemented will generate at least £1.4bn for the exchequer from the auction, but we expect demand for this prime real estate of the airwaves to drive prices up to £3bn – £4bn”. He described the desire for spectrum in the 800MHz range as a likely “key driver of competitive tension”.
Further delays still not ruled out
Despite today’s firm announcement by the regulator, there could be further delays if operators launched new legal action with regards to the auction process. Richard said that it was impossible for Ofcom to satisfy everyone, and that therefore the regulator was fully prepared for litigation and that it would defend its decisions.
All four network operators said today that they needed time to study the documents before coming to final conclusions. A Vodafone spokesperson said: “Ofcom appears to have created a mechanism to deliver the spectrum needed to run competitive 4G services and we welcome the work it has done.”
O2 noted that “Ofcom has taken a number of our suggestions on-board, they are combined with other changes to the previous proposals”.
