July 24, 2012 / 6:25 AM / in 7 years

Ofcom unveils 4G auction to kick start high-speed mobile

LONDON (Reuters) - Telecoms regulator Ofcom said on Tuesday that the auction of spectrum for 4G services would get under way by the end of the year, laying the path for high-speed mobile Internet to be rolled out in 2013.

The plans should see the high-speed connections needed for video, interactive gaming and downloading films and music, reach at least 98 percent of the population, the regulator said.

Britain needs more spectrum for mobile services to provide data capacity more cost efficiently, analysts said, and to avoid falling further behind countries that have 4G up and running.

Ofcom, which has had to strike a balance between promoting competition in the market, extending coverage to as many people as possible and raising money for the government, said some of the available spectrum had been reserved for a fourth national wholesaler other than the three largest operators.

The regulator said this could be taken up by Three, owned by Hutchison, the smallest player behind Everything Everywhere, owned by France Telecom and Deutsche Telekom, Vodafone and Telefonica’s O2.

“As a direct result of the measures Ofcom is introducing, consumers will be able to surf the web, stream videos and download email attachments on their mobile device from almost every home in the UK,” Ofcom Chief Executive Ed Richards said.

The auction will offer at least two spectrum bands, 800 MHz (megahertz) and 2.6 GHz (gigahertz), Ofcom said, and the available airwaves have a combined reserve price of 1.4 billion pounds.

Analysts at PwC said they expected demand for the prime real estate of the airwaves to drive prices up to 3 billion pounds to 4 billion pounds. “The desire for sub 1 GHz spectrum is likely to be a key driver of competitive tension,” they said.

Mobile operators, keen to refresh their packages of spectrum while at the same time not allowing their rivals to gain an advantage, had hotly contested the terms of the auction.

Ofcom made some concession to Vodafone and O2, which already own the most efficient sub-1 GHz spectrum, earlier this year after they complained about a proposed system of caps and floors that they said favoured Everything Everywhere and Three.

But the operators broadly welcomed the publication of the rules as an important step in bringing 4G to Britain.

“Ofcom appears to have created a mechanism to deliver the spectrum needed to run competitive 4G services and we welcome the work it has done,” a Vodafone UK spokesman said.

Everything Everywhere said: “While there are still some elements of today’s proposals which we don’t think are in the interests of competition or consumers ... we recognise that we need to get this process moving now before the UK falls further behind the rest of the world.”

It wants to use some of its existing spectrum for 4G services, something the regulator had said it is minded to allow.

“The next milestone will be the regulator’s response to our request to roll out 4G over our existing 1800 MHz spectrum without further delay,” it said.

Mobile operators are expected to start rolling out 4G networks using the auctioned spectrum from the middle of 2013, and to start offering 4G services to consumers later that year, Ofcom said.

Countries which already have 4G services include the United States, South Korea and Sweden, while other European countries such as Germany are beginning to roll them out.

Editing by Jon Loades-Carter

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