Ofcom has launched a consultation seeking views on how best to auction 4G licences; the largest ever single auction of additional spectrum for mobile services in the UK. It is equivalent to three quarters of the mobile spectrum in use today, and 80 per cent more than the 3G auction which took place in 2000. The spectrum is designed to meet the UK’s rapid increase in mobile traffic, fuelled by the growth of smartphones and mobile broadband data services.

The auction will sell off two spectrum bands – 800MHz and 2.6GHz – adding up to 250MHz of additional mobile spectrum. The 800MHz band is part of the digital dividend, which is being freed-up as the UK switches from analogue to digital TV, and is ideal for widespread mobile coverage. The 2.6GHz band is offers the capacity needed to deliver higher speeds.

Ofcom says the combination of low- and high-frequency spectrum available creates the potential for next generation mobile broadband services to be widely available across the UK, while at the same time having the capacity to cope with significant demand, even in urban centres.Under measures being proposed by Ofcom, the auction will include a combination of safeguards and coverage conditions to promote competition and significantly widen the coverage of mobile broadband to 95 per cent of the UK population.

Interested parties have until 31 May, 2011, to respond to the consultation. Ofcom will publish one or more consultation documents relevant to the licence award in the next few months, and plans to set out its decision for the award in a statement in the autumn, alongside draft auction regulations for statutory consultation. Ofcom then aims to start the auction in the first quarter of 2012. It expects mobile  operators to start rolling out 4G networks from the beginning of 2013, with services available to customers possibly later the same year.

“The auction is not only critical to the future of the UK mobile telecommunications market, but it is also of significant importance to the wider economy,” says Ofcom chief executive, Ed Richards. “It will support a wide range of data services that are fast becoming essential features of the modern world. Our role as the independent regulator is to award this spectrum in a way that secures the best use of the spectrum for the benefit of citizens and consumers in the UK. That is why we are proposing to design the auction in a way that not only encourages investment but also promotes competition and delivers wide coverage of services.”

The auction of 3G licences in the UK in 2000 raised £22.5bn, but many commentators believe the sums paid by the mobile operators hampered their ability to invest in services to run on them, and the 4G auctions are thought unlikely to raise anything like the same amount, certainly if the German 4G auction is any guide. Its 4G auction, held last year, raised €4.3bn (£3.8bn), compared to the €50bn raised in the country’s 3G auction in 2000.

You can see the consultation document here.