Ofcom have announced that the auction for spectrum to be used for next generation mobile broadband services is expected to take place in early 2012. The auctions will make available frequencies for use by mobile network operators to use for what are commonly (although incorrectly) called 4G mobile technologies such as LTE (Long Term Evolution) and WiMAX. Around 250MHz is being made available within the 800MHz band and 2.6 GHz bands, with plans also afoot to liberalise the use of the existing 900MHz and 1800MHz bands for technologies like LTE.
Ofcom's consultation published today defines how the auction will take place which includes implementations of floors and caps on the amount of each spectrum an operator can acquire, and also further caps on the total amount of spectrum that can be accumulated. One license will also obligate the operator to provide reception to 90% probability for indoor reception and to an area within which at least 95% of the UK population lives. This should provide a minimum "sustained downlink speed" of 2Mbps, and must be in place by the end of 2017.
Of particular interest to the government is the cash cow that exists in the airwaves. The auction of the 3G spectrum netted the government £22.5 billion in revenue, but the high bids left network operators low on cash for actual deployments. This time round, Ofcom is looking toward the German model which reduced the amount spent by around 10 times in comparison to the 3G auctions.
"The auction is not only critical to the future of the UK mobile telecommunications market but it is also of significant importance to the wider economy. It will support a wide range of data services that are fast becoming essential features of the modern world.
Our role as the independent regulator is to award this spectrum in a way that secures the best use of the spectrum for the benefit of citizens and consumers in the UK. That is why we are proposing to design the auction in a way that not only encourages investment but also promotes competition and delivers wide coverage of services."Ed Richards, (Chief Executive) Ofcom
The new licenses will be awarded for 20 years from the start of January 2013, but use will be restricted until the 800MHz band has been completely cleared of digital terrestrial TV. One of the more interesting aspects of this will be to see who else bids. BT have previously been rumoured to be interested in getting back in to the mobile market with their own network. They did of course previously own O2 before it was sold to Telefonica. There may also be other interested parties which could bring a new operator to the scene in a similar vain to Three who operator only 3G services in the UK.