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Ofcom announces winners of the 4G mobile auction

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  • Five winning bidders to deliver future mobile competition in the UK
  • 4G services from a range of operators expected within six months
  • Research measuring 4G speeds to be conducted at the end of 2013

Ofcom has today announced the winners of the 4G mobile spectrum auction.

After more than 50 rounds of bidding, Everything Everywhere Ltd, Hutchison 3G UK Ltd, Niche Spectrum Ventures Ltd (a subsidiary of BT Group plc), Telefónica UK Ltd and Vodafone Ltd have all won spectrum. This is suitable for rolling out new superfast mobile broadband services to consumers and to small and large businesses across the UK1.

The auction has achieved Ofcom’s purpose of promoting strong competition in the 4G mobile market. This is expected to lead to faster mobile broadband speeds, lower prices, greater innovation, new investment and better coverage. Almost the whole UK population will be able to receive 4G mobile services by the end of 2017 at the latest.

A total of 250 MHz of spectrum was auctioned in two separate bands – 800 MHz and 2.6 GHz. This is equivalent to two-thirds of the radio frequencies currently used by wireless devices such as tablets, smartphones and laptops.

The lower-frequency 800 MHz band is part of the ‘digital dividend’ freed up when analogue terrestrial TV was switched off, and is ideal for widespread mobile coverage. The higher-frequency 2.6 GHz band is ideal for delivering the capacity needed for faster speeds. The availability of the two will allow 4G networks to achieve widespread coverage as well as offering capacity to cope with significant demand in urban centres.

Ed Richards, Ofcom Chief Executive, said: “This is a positive outcome for competition in the UK, which will lead to faster and more widespread mobile broadband, and substantial benefits for consumers and businesses across the country. We are confident that the UK will be among the most competitive markets in the world for 4G services.

“4G coverage will extend far beyond that of existing 3G services, covering 98% of the UK population indoors – and even more when outdoors – which is good news for parts of the country currently underserved by mobile broadband.

“We also want consumers to be well informed about 4G, so we will be conducting research at the end of this year to show who is deploying services, in which areas and at what speeds. This will help consumers and businesses to choose their most suitable provider.”

Widespread 4G coverage
Ofcom has attached a coverage obligation to one of the 800 MHz lots of spectrum. The winner of this lot is Telefónica UK Ltd. This operator is obliged to provide a mobile broadband service for indoor reception to at least 98% of the UK population (expected to cover at least 99% when outdoors) and at least 95% of the population of each of the UK nations – England, Northern Ireland, Scotland and Wales – by the end of 2017 at the latest.

Results
A breakdown of what was won, who won it and the base prices payable is detailed below:   

Winning bidder Spectrum won Base price
Everything Everywhere Ltd 2 x 5 MHz of 800 MHz and
2 x 35 MHz of 2.6 GHz
£588,876,000
Hutchison 3G UK Ltd 2 x 5 MHz of 800 MHz £225,000,000
Niche Spectrum Ventures Ltd (a subsidiary of BT Group plc) 2 x 15 MHz of 2.6 GHz and
1 x 20 MHz of 2.6 GHz (unpaired)
£186,476,000
Telefónica UK Ltd 2 x 10 MHz of 800 MHz
(coverage obligation lot)
£550,000,000
Vodafone Ltd 2 x 10 MHz of 800 MHz,
2 x 20 MHz of 2.6 GHz and
1 x 25 MHz of 2.6 GHz (unpaired)
£790,761,000
Total £2,341,113,000

 
The following bidders were not winning bidders:

MLL Telecom Ltd
HKT (UK) Company Ltd

The winning bidders now have until 23:59 on 21 February 2013 to pay any outstanding
sums to Ofcom for the spectrum they have won. All proceeds from the auction will go to HM Government.

Value for consumers
In 2012, Ofcom conducted an assessment of future mobile competition in the UK. This concluded that consumers were likely to benefit from better services at lower prices if there were at least four credible national wholesalers of 4G mobile services.

However, going into the auction, Ofcom took the view that there were only three operators (EE, O2 and Vodafone) with sufficient spectrum to support such services. Therefore, in the interests of competition, spectrum was reserved in the auction for a fourth national wholesaler. That spectrum has been won by Hutchison 3G UK Ltd.

The value of the benefits which 4G services will provide to UK consumers over the next 10 years (the ‘consumer surplus’) is likely to be at least £20bn, according to Ofcom estimates.

The UK’s communications networks will become more advanced as 4G is rolled out over the coming months. This new infrastructure, together with software development, employment opportunities and new mobile revenues, means 4G is likely to make a significant contribution to UK economic growth.

Next steps
While the main part of the auction has concluded, there is a final stage in the process to determine where in the 800 MHz and 2.6 GHz bands each winning bidder’s new spectrum will be located. Bidding in this final stage – called the ‘assignment stage’ – will take place shortly.

Following that stage, once bidders have paid their full licence fees, Ofcom will grant licences to the winners to use the spectrum. Operators will then be able to start rolling out their networks, with consumer services expected in spring or early summer 2013.

3G and 4G mobile broadband speeds research
Ofcom will also be carrying out research to measure the performance of 3G and 4G networks.

This will be broken down by operator and will assess the average mobile broadband speeds received by 3G and 4G customers. It will be designed to help consumers understand the performance benefits of 4G over 3G mobile services and assist them in making informed purchasing decisions.

Ofcom expects to conduct this research around December 2013 and publish the results in spring 2014.

Planning for the future
By 2030, demand for mobile data could be 80 times higher than today2. To help meet this demand and avert a possible ‘capacity crunch’, more mobile spectrum is needed over the long term, together with new technologies to make mobile broadband more efficient. Ofcom is planning now to support the release of further spectrum for possible future ‘5G’ mobile services3.

ENDS

NOTES FOR EDITORS

  1. Winning bidders may choose to deploy services to consumers, businesses or a mixture of the two.
  2. See Real Wireless report on techniques for increasing the capacity of wireless broadband networks.
  3. Ofcom published a news release detailing these proposals in November.
  4. 4G and digital terrestrial television. The Government has decided that hundreds of thousands of homes will receive help to prevent 4G services interfering with digital terrestrial television (DTT) signals. The winners of the 800 MHz spectrum will meet the cost of this, which will be £180m. Most TV viewers will be able to solve any problems by fitting a filter, which will be provided free-of-charge by the assistance scheme. Vouchers will be provided to eligible households who need an engineer to visit. The industry body running this process is Digital Mobile Spectrum Limited.
  5. Existing 4G services: In August 2012, Ofcom approved an application by the mobile phone operator Everything Everywhere (EE) to use its existing 1800 MHz spectrum to deliver 4G services. This decision was taken after conducting a thorough assessment of how competition might be affected. Ofcom concluded that consumers would benefit significantly from gaining early access to 4G services, and that there was no material risk that those benefits would be outweighed by a distortion of competition. EE launched a commercial 4G service in some areas of the UK on 30 October 2012.
  6. The term 4G is generally used to refer to mobile broadband services delivered using the next generation of mobile broadband technologies, including Long Term Evolution (LTE) and WiMAX.
  7. Ofcom is the independent regulator and competition authority for the UK communications industries, with responsibilities across television, radio, telecommunications, wireless communications and postal services.
  8. Ofcom’s principal duty under the Communications Act 2003 is to further the interests of citizens, and the interests of consumers where appropriate by promoting competition. Ofcom is also required to secure the optimal use for wireless telegraphy of the electro-magnetic spectrum.
  9. In holding the auction and putting in place measures to promote competition, Ofcom is acting in accordance with the Government’s Wireless Telegraphy Act 2006 (Directions to Ofcom) Order 2010.

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