On 20 February Ofcom announced the identities of the four companies who had won 4G spectrum licences in the auction which was being held to sell them. But the real surprise wasn't the identities of the winning bidders; it was the amount which Ofcom said that the 4G licences had been sold for in the auction - just £2.34 billion
That figure was such a surprise because in December George Osborne had confidently predicted that the 4G auction would raise £3.5billion for the government (PricewaterhouseCoopers central estimate was £3billion). Now, just over two months later, we are finding out that the government has missed its target by more than £1 billion - a very substantial amount of money at a time when huge cuts in public spending are being made.
So why have the government not raised as much money as George Osborne has hoped? It has become clear that it is because the Conservative-led government made a huge mistake in the auction process. As revealed by Ed Richards, the head of Ofcom, the government did not make maximizing the proceeds of the auction an objective.
This is a shocking revelation and one that smacks of incompetence. How on earth can you announce you want to raise £3.5 billion from an auction and then not make maximizing the money that you're trying to raise a priority?
Perhaps worst of all is this is just the latest example of the Conservative-led government's failure in relation to the 4G auction. When David Cameron and George Osborne took office in 2010 the 4G auction was ready to proceed. But on their watch the auction was delayed by more than two and half years. As a result the government missed out on a further £500million in revenues from the licence fees and interest.
As if that wasn't bad enough their incompetence also meant that even countries such as Moldova and Uzbekistan were able to get 4G services before British customers. This government does not seem to understand how important investment in infrastructure is to Britain's economy. It obviously seems to have no understanding of the huge benefits 4G could have given Britain, an economy which is already global number one for e-commerce.
From start to finish the Conservative-led government's handling of the 4G auction process has been nothing short of shambolic.
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