4G auction details confirmed

Ofcom has decreed that December 11 shall be the Government’s auction day for distributing 4G spectrum to the UK’s mobile network operators.

Ofcom, the UK’s telecommunications regulator has published its list of final regulations for the long awaiting 4G mobile spectrum auctions, which it claims will be the largest ever sale of mobile airwaves in the UK.

What makes this auction more tantalising was Ofcom’s decision to allow Everything Everywhere (the French/German owners of T-Mobile and Orange) to refarm its existing mobile spectrum, which saw it launch the UK’s first 4G mobile network just last month.

Rivals, especially Vodafone and O2, are already operating at capacity and have had to wait for Ofcom’s 4G spectrum auction to buy the necessary radio spectrum.

This means EE have already been given a near half-year head start as even when the auctions are completed on December 11, its rivals will still need to upgrade and install their equipment before launching.

The fourth generation of cellular wireless networks will offer almost every compatible device in the world a big boost from the current 2G and 3G data speeds – equivalent to current fixed line broadband.

Think of 4G as a nationwide, high speed Wi-Fi hot spot, with better penetration than current mobile networks. The government has even touted it as the solution to the ‘digital divide’ as Ofcom pushes for 95%-98% rural coverage. It is a huge step for consumers, a huge opportunity for businesses and will affect the national economy top to bottom.

Today marks an important shift from preparation to the delivery of the auction, which will see widespread 4G mobile services from a range of providers, said Ed Richards, Ofcom Chief Executive.

The entire industry is now focused on the auction itself, with a shared goal of delivering new and improved mobile services for consumers.

Ofcom also today confirmed the reserve price of 1.3bn for the auction, a far cry from the 3G spectrum auctions ten year ago which reached 22bn in the UK, 30bn in Germany and around 100bn across the continent as a whole. These crazy prices have often been blamed for the Telecom’s crash of 2001.

Ofcom has predicted in the past that the 4G auction will deliver benefits to the Government of just 2bn to 4bn this time round. Germany’s recently completed 4G auction netted its government just 4.4bn (3.7bn).

The UK’s 4G auction was expected to occur back in 2007, but endless legal posturing by the telcos and bureaucratic delays mean that the UK formerly one of the most advanced mobile countries in the world fell behind key rivals such as Germany, South Korea and the USA.

Labour’s Shadow Secretary for Media, Helen Goodman, estimated that it is costing the economy 1m a day – and If the UK’s networks aren’t up before 2015, she estimates it will have cost the economy 1.5bn total. Fortunately, it now looks like all of the UK’s mobile operators will have their networks up and running by mid-2013.

Ofcom’s Timeline

11 December: The application day

Prospective bidders submit their applications to Ofcom together with an initial deposit.

December: Qualification stage

Applications are reviewed to determine who can go on to bid in the auction.

January: The principal stage

Bidding begins. This could take a number of weeks. Bids will be placed online over secure internet connections, using software that has been developed specifically for the auction.

February/March: The assignment stage

Bidders informed what they have won and its cost.

February/March: The grant stage

Licence fees are paid and licences granted.

May/June: New 4G services launched

New 4G services expected to go live from a range of providers.