Everything Everywhere, Hutchison 3G UK, BT subsidiary Niche Spectrum Ventures, Telefonica and Vodafone have emerged triumphant in the UK Treasury’s auction of 4G mobile spectrum. The auction raised less than had been expected, however, with the winning bids amounting to just £2.34bn, rather than the £3.5bn that had been forecast by the Office for Budget Responsibility. It looks a pittance when compared to the £22.5bn raised by the auction of 3G spectrum in 2000.
Ofcom auctioned a total of 250 MHz of spectrum in two separate bands – 800 MHz and 2.6 GHz. This is equivalent to two-thirds of the radio frequencies currently used by wireless devices such as tablets, smartphones and laptops. It took more than 50 rounds of bidding to arrive at today’s result. Ofcom says that almost the whole UK population will be able to receive 4G mobile services by the end of 2017 at the latest.
The lower-frequency 800 MHz band is part of the ‘digital dividend’ freed up when analogue terrestrial TV was switched off, and is ideal for widespread mobile coverage. The higher-frequency 2.6 GHz band is ideal for delivering the capacity needed for faster speeds.
Vodafone paid most, coughing up £790.8m for 2 x 10 MHz tranches of the 800 MHz spectrum, and 2 x 20 MHz of the 2.6 GHz spectrum, plus 1 x 25 MHz of 2.6 GHz (unpaired) spectrum. Everything Everywhere paid £588.9m for 2 x 5 MHz of 800 MHz and 2 x 35 MHz of 2.6 GHz.
Telefónica paid £550m, but its winning bid secured only 2 x 10 MHz of the 800 MHz spectrum, with none of the higher capacity 2.6 GHz spectrum. Ofcom also attached a coverage obligation to the 800 MHz spectrum won by Telefónica. As a result, the operator is obliged to provide a mobile broadband service for indoor reception to at least 98 per cent of the UK population (expected to cover at least 99 per cent when outdoors) and at least 95 per cent of the population of each of the UK nations – England, Northern Ireland, Scotland and Wales – by the end of 2017 at the latest.
Hutchison 3G UK also secured 2 x 5 MHz of 800 MHz spectrum for £225m, while BT’s Niche Spectrum Ventures subsidiary paid £186.5m for 2 x 15 MHz of 2.6 GHz spectrum, and 1 x 20 MHz of 2.6 GHz (unpaired) spectrum.
Ofcom chief executive Ed Richards described the result as: “a positive outcome for competition in the UK, which will lead to faster and more widespread mobile broadband, and substantial benefits for consumers and businesses across the country.”
Richards continued: “We are confident that the UK will be among the most competitive markets in the world for 4G services. 4G coverage will extend far beyond that of existing 3G services, covering 98 per cent of the UK population indoors – and even more when outdoors – which is good news for parts of the country currently underserved by mobile broadband.”
He added that Ofcom wants consumers to be well informed about 4G, and would be conducting research at the end of 2013 to show who is deploying services, in which areas and at what speeds, in order to help consumers and businesses to choose their most suitable provider.”
Who Won What – A Summary:
Vodafone - 2 x 10 MHz of 800 MHz, 2 x 20 MHz of 2.6 GHz and 1 x 25 MHz of 2.6 GHz (unpaired). Price paid: £790.8m
Everything Everywhere - 2 x 5 MHz of 800 MHz and 2 x 35 MHz of 2.6 GHz. Price paid: £588.9m
Telefónica – 2 x 10 MHz of 800 MHz (coverage obligation lot). Price paid: £550m
Hutchison 3G UK - 2 x 5 MHz of 800 MHz. Price paid: £225m
Niche Spectrum Ventures – 2 x 15 MHz of 2.6 GHz and 1 x 20 MHz of 2.6 GHz (unpaired). Price paid: £186.5m
Click here for an analyst’s take on the auction result