Ofcom Outlines 4G Spectrum Auction With Pledge To Extend Coverage To 98% Of UK
Ofcom has outlined revised proposals for its 4G mobile spectrum auction, which could raise more than £5bn and extend coverage to 98% of the UK.
With mobile data consumption set to multiply by five times by 2017, the regulator is selling off spectrum, including that freed up by the digital TV switchover, to boost high-speed coverage.
In its consultation Ofcom said that the bidding process is still scheduled for the end of 2012, but added that the finer details will not be confirmed before a 10-week consultation is completed in April.
Ofcom says that the winning bidder will now have to provide 4G coverage to at least 98% of the UK population, higher than the 95% originally planned.
It added that a winning mobile operator could have access to the £150m set aside by the government to boost mobile infrastructure in rural areas as an added incentive.
Ofcom also said that it would reserve a share of the spectrum to be used by companies committed to "innovative new mobile services".
The regulator said: "Potential applications include local mobile networks for student campuses, hospitals or commercial offices, which operate on short-range frequencies serving a small area."
Mobile networks are said to be frustrated that Ofcom has not moved quicker to sell the 800MHz spectrum, which is being freed up by the switchover to digital television.
A higher capacity 2.8GHz band will also be sold-off, for use in urban areas with lots of users.
The two bands are equivalent to about 75% of the spectrum currently used by mobile operators.
Phone companies argue that 4G service is already widely available in the United States and some other countries, and that the UK is being left behind.
But with the sell-off expected to raise billions the regulator says it is taking its time to ensure the sale is fair and provides a good deal for UK consumers.
Ed Richards, Ofcom's chief executive, said the sale was "the most significant spectrum release in the UK for many years".
In its revised proposals Ofcom said that no 800MHz spectrum would be reserved for Three and Everything, Everywhere as previously indicated.
Each network will be limited on how much of the spectrum they can bid for, to ensure competition in the market.
The regulator said: "Because of their current spectrum holdings, and/or the much lower risk that these national wholesalers would fail to acquire further spectrum in the auction, we do not consider it necessary to reserve any spectrum for Everything Everywhere, Telefonica [O2] or Vodafone.
"We therefore think it is appropriate, and so propose to, in effect, reserve some of the available spectrum for a fourth national wholesaler, by which we mean a bidder other than Everything Everywhere, Telefonica or Vodafone."
Everything, Everywhere - a merger of Orange and T-Mobile, said that it was disappointed by the decision.
In a statement the company said: "Ofcom is missing a huge opportunity for the UK to address the imbalance in sub 1GHz spectrum holdings, which has damaged consumer interests for the last 20 years - and is a situation which is now threatening to continue.
"The importance of sub 1GHz spectrum, which delivers service and cost benefits, has been recognised by other regulators across Europe and supported by economic analysis."
Other mobile operators welcomed the proposals.
David Dyson, CEO of Three, was quoted by the BBC as saying it praised the "pragmatic" measures.
A spokesperson for Vodafone said they brought the UK closer to a "fair and open auction that will benefit the wider economy".