4G Licence Auction scheduled for 2013!

The UK’s much postponed 4G spectrum auction will not now take place until 2013, although regulator Ofcom has come closer to clarifying the rules, particularly in reserving some frequencies for a smaller player, cell:cm has learned.

Rethink Wireless reports Ofcom had not set a specific date but had indicated it would sell the licences, in 800MHz and 2.6GHz, before the end of 2012. But now it says that, although the process will kick off before year end, spectrum will not actually be allocated until 2013, delaying roll-outs until the later part of that year. This leaves the UK – once expected to be the first European country to sell 2.6GHz licences – well behind other large economies like France and Germany, let alone the 4G frontrunners in Scandinavia.

The UK auction has been delayed multiple times by disputes and legal challenges arising from its complex and atypical spectrum situation. In particular, only two operators – Vodafone and O2 – have GSM networks in 900MHz, while Everything Everywhere runs 2G in 1.8GHz. Since cellcos are keen to acquire sub-1GHz frequencies because of their suitability for rural coverage and indoor penetration, EE has argued that its two rivals should be capped in the amount of 800MHz spectrum they can buy.

Another difficult issue has been the position of 3UK, the fourth cellco, which has no GSM spectrum, and has argued that it must be allowed to secure sufficient 800MHz frequencies to remain viable against the other three. In fact, Ofcom has finally decided to reserve some spectrum for a fourth national operator, other than the big three – which could be 3UK or a new entrant. Several media players have been testing LTE or expressing interest in mobile networks, including cableco Virgin Media and satellite broadcaster BSkyB. Incumbent wireline carrier British Telecom could also enter the fray, probably as a wholesaler.

According to the new timetable, interested parties will be invited to apply to participate in the auction before the end of 2012 and once Ofcom has approved the bidders, the sale will take place in early 2013. The regulator points out that this still allows time for commercial services to launch during 2013, hitting its previously stated timelines.

One of the 800MHz licences will include the obligation to provide indoor mobile broadband coverage for at least 98% of the population by the end of 2017 (with at least 95% in each of the states of the UK, England, Scotland, Wales and Northern Ireland). Ofcom envisages that this licence will cover more than 99% of the population outdoors.

The final stage of statutory consultation on the auction will close on September 11. The further delay will increase the pressure on Ofcom to allow Everything Everywhere to deploy LTE as early as this year, in its existing 1.8GHz 2G spectrum. This proposal has come under fire from Vodafone and O2, which say it would give EE an unfair headstart, though the Orange/T-Mobile joint venture does have to sell off about 25% of its 1.8GHz frequencies as a condition of its merger, which could give a similar chance to another cellco. 3UK has indicated it will support the plan if it is given access to the resulting EE network (it already has a RAN sharing joint venture with the larger operator).

Ofcom has also set out reserve prices for the first time, which total £1.4bn (or £1.6bn including EE’s 1.8GHz spectrum, which could be sold at the same time or in a separate private transaction). Analysts are talking about figures around £4bn for the final proceeds.

Thomas Wehmeier, principal analyst for telco strategy at Informa, commented: “The UK is already seen as Europe’s most complex and fragmented telecoms market and it now looks set to add another unwanted title to its repertoire as a European 4G laggard.”

 

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