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Big Names Win UK 4G Carve Up
But auction misses 3.5 billion target
by JKukiewicz 08:46AM Wednesday Feb 20 2013
Five of the UK’s biggest telecoms firms have managed to snare a slice of the 4G spectrum, the communication regulator, Ofcom, announced today. BT, EE (EverythingEverywhere), O2, Three UK and Vodafone all gained access to 800MHz and 2.6GHz radio spectrum, though a final allocation process still needs to determine exactly which place each company will take in that spectrum range.

Two lesser known bidders failed to grab a share, however.

HKT, a subsidiary of Hong Kong telecoms giant PCCW, operates in the UK as Now Broadband and already offers 4G home broadband services for businesses and consumers. With extra capacity, the company could have gained another foothold in those competitive markets or continued to develop the other side of its business: small networks for communities without other internet access.

MLL Telecom, a UK company which specialises in backhaul links and wide area networks, would have used the extra capacity to move further into small cell provision, helping mobile operators to effectively plug the coverage gaps on overcrowded networks caused by ever increasing demand for mobile data.

Supporting fibre

BT, bidding as Niche Spectrum Ventures, were an interesting late addition to the 4G auction and also plan to use their share of the spectrum to plug some gaps. The UK’s former incumbent telecoms provider hasn’t actually owned a mobile network since the sale of BT Cellnet many years ago and the company denies that their slice of the 4G auction is designed to get them back in the game.

Instead, BT say, they'll use 4G to support users of their existing fixed line infrastructure and build on their "existing strength" in Wi-Fi.

Virgin Media, the UK’s other big provider of fibre, are also likely to use 4G to support their existing services. Although the company didn’t bid in the auction they do already use EE’s network to provide mobile services as a complement to their increasingly popular 100Mb (see more here) fixed line services.

Treasury lose out

Bidders paid just over two billion pounds – or £2,341,113,000, to be precise – in an closed auction process that saw around 50 bids in all.

That amount, just 10% of the amount the 3G auction raised in 2000, has been widely interpreted as a blow to the Treasury: in his Autumn Statement the chancellor, George Osbourne, predicted that it would raise £3.5 billion.

Take that angle with a pinch of salt, however. It’s no secret that Osbourne’s figure was fairly optimistic.

Ofcom’s reserve price, announced in November, was £1.3 billion and the regulator has consistently declined to guess how much the process would raise and, when pressed, Ofcom’s chief executive Ed Richards noted that he hadn’t heard the £3.5 billion figure before Osbourne bought it up.

"However many billions the actual revenue is, the real economic benefit here is in the benefit to consumers and the economy… If we were to calculate the estimated economic benefit of that, it would massively dwarf the revenues from the auction, so that is the game for us," Richards said.

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Juggernaut
Irreverent or irrelevant?
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join:2006-09-05
Kelowna, BC
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Two words

Reserved bids.

But of course, I guess the Brits have to make sure 'special friends' get deals, eh?

Not like this is different anywhere else, though.
--
"I fear the day that technology will surpass our human interaction. The world will have a generation of idiots." ~ Albert Einstein

ohreally

@claranet.co.uk

Re: Two words

said by Juggernaut:

Reserved bids.

But of course, I guess the Brits have to make sure 'special friends' get deals, eh?

Not like this is different anywhere else, though.

As a UK taxpayer I don't see the problem with the "low" result. If the government got tens of billions like they did for the 3G auction (which as I understand it was run completely differently, and it was during the height of the technology boom) it'd just be passed on to consumers' bills and/or mean we don't actually get any LTE coverage because there's no money to do it with.

Personally I'd have given the operators a break in return for significant coverage obligations (a very high % of the population in a couple of years including a decent amount of rural coverage) so that people can actually benefit from it.