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4G auction results leave hole in Chancellor's Budget
Wednesday 20 February 2013 07:49:14 by Andrew Ferguson

The 4G auction process is now almost complete, although as things stand before the final round of bidding, the auction is £1 billion short of the Governments target of £3.5bn that was announced in the Autumn Statement in 2012. There is a final short round of bidding to take place to determine where exactly in each band the blocks that have been assigned will precisely reside, though it is very unlikely this bidding will make a significant dent in the shortfall.

Winning Bidder Spectrum Won Base Price
EE - Everything Everywhere Ltd 2 x 5 MHz in 800 MHz band and
2 x 35 MHz in 2.6 GHz band
£588,876,000
three - Hutchinson 3G UK Ltd 2 x 5 MHz in 800 MHz band £225,000,000
BT - Niche Spectrum Ventures Ltd 2 x 15 MHz in 2.6 GHz band
and 1 x 20 MHz in 2.6 GHz band (unpaired)
£186,476,000
O2 - Telefonica UK ltd 2 x 10 MHz in 800 MHz band
(the coverage obligation)
£550,000,000
Vodafone Ltd 2 x 10 MHz in 800 MHz band and
2 x 20 MHz in 2.6 GHz and
1 x 25 MHz in 2.6GHz (unpaired)
£790,761,000
Total   £2,341,111,000

Ofcom suggests that the networks will start rolling out in Spring/Summer 2013 and already you can see the three network promising the extra G, though we are very unsure about the use of ultrafast in their advertising, as in the fixed world this means a connection of 100 Mbps or faster and while 4G LTE can in theory do 150 Mbps in ideal conditions when stationary, the chances of people seeing this in the real world is almost nil.

The blocks won by BT do not mean the firm is entering back into the mobile market (well not just yet anyway) as the 4G services currently have to rely on 3G to carry the voice traffic, though VoLTE (Voice over LTE) is on its way to handsets. BT has spent this money on the spectrum to provide mobile data services and as such will be a key part in ensuring the Universal Service Commitment for broadband is reached. With the BT blocks being in the 2.6GHz band it is more suited to small cell deployments to provide coverage for a small village and the higher frequencies are more readily blocked by walls and trees.

The amounts paid by the operators are much more sensible than the original 3G licences, but given the economic situation, they may still have a significant impact on each firms financial figures. Where the shortfall is going to be felt the most is with the Chancellor who now has a £1 billion hole that will have to be filled in the forthcoming Budget. This is the danger of allocating money from an auction before knowing the outcome.

Comments

Posted by sni9er about 1 year ago
£! Billion short ?? Haha
Posted by chrisdev about 1 year ago
This article provides some useful information, but every other media report I have read so far this morning has been focusing on the shortfall in money paid to the government. Who cares!? Keep your government digs to their policies and ability to execute, and lets get some comment from the operators themselves about their plans going forward.
Posted by undecidedadrian about 1 year ago
Given that Three had thrown down the gauntlet with no extra money being charged for 4G it was obvious that they were not going to go overboard at the auction and the others must have concluded the same.

Makes me laugh how the UK government was already counting the money even before it was decided. Doesn't matter who is in charge politicians are all useless.
Posted by tthom about 1 year ago
Excuse me for being slightly uneducated in this but what's the difference between the 5mhz and 10 mhz of the 800mhz spectrum
Posted by herdwick about 1 year ago
the difference is the bandwidth the operator can use - LTE for example can be set up for 5,10, 20 MHz channel widths. 20 MHz is quite a popular bandwidth but unfortunately nobody got that at 800 MHz. So the speed & capacity available from one operator at 800M will be less than it could have been.
Posted by herdwick about 1 year ago
More money would have been got without the coverage obligation and if 20 MHz blocks were available, this is more of a consumer win with more competition and some coverage obligation.
Posted by AndrueC about 1 year ago
"This is the danger of allocating money from an auction before knowing the outcome."

A government spending money it doesn't yet have? Wow - there's a novelty :(
Posted by timmay about 1 year ago
Three bidding for just 2 x 5Mhz! That's never going to provide enough capacity...

How much of the 1800Mhz spectrum did they get from the Orange and T-Mobile merger?
Posted by iridium about 1 year ago
@timmay
according to isp review three acquired 2 X 15MHz in the 1800MHz spec.
Posted by PJWilkin about 1 year ago
I'm suprised at O2 not getting any more spectrum. It almost looks like they could not be bothered
This does not bode well for O2 customers

Vodafone will probably have the best coverage set of spectrum

One wonders
a) what frequency bands have been allocated to each company
b) How fast they will roll them out
Posted by timmay about 1 year ago
It seems in general that Telefonica can not be bothered with anything ... broadband customers are leaving as they fail to stay competitive and upgrade the network.
Posted by timmay about 1 year ago
PS O2 got 2 x 10 MHz in 800 MHz band
Posted by andrew (Favicon staff member) about 1 year ago
Have looked at ofcom doc and the allocations in article look correct
Posted by PJWilkin about 1 year ago
O2 may have got 2x 10Mhz in the 800 MHz band,
but where in the band ? I ask as this could affect which phones (currently on the market) might support it

O2 should have bid for some 2.6 GHz range spectrum

I wonder if they were just bidding to do the minimum action so that their customer would have a reason to stay
Posted by MaverickJesus about 1 year ago
Telefonica don't have any money, that's the more likely reason.
Posted by andrew (Favicon staff member) about 1 year ago
There is one more round of bidding to determine the precise frequency used for each allocation.

So Chancellor can expect a bit more money, but seems unlikely that it will be anything close to what the Chancellor would like.
Posted by chrysalis about 1 year ago
1 billion is pennies to a government, but these short of stories crop up when we have a government that is penny pinching and is too stubborn to increase taxes. They could make 1 billion tommorow eg. with a 2% rise in corp tax rates.
Posted by otester about 1 year ago
Also remember O2/Vodafone have 900Mhz spectrum.

Three made a wise hoice getting EE's 1800Mhz.
Posted by michaels_perry about 1 year ago
Who says 4G will be better? TV engineers are aware of transmission problems in the Band 5 UHF range used by 4G and there will be many 'black spots due to shielding by buildings and terrain. Analogue TV used over 1000 transmitters of up to 1 MW but still had non-reception holes. What chance 4G?
Posted by andrew (Favicon staff member) about 1 year ago
There are something like 52,000 mobile base stations in the UK, so a lot denser meaning that shadows from hills/buildings should in theory be less

The lower the frequency generally the better it penetrates materials like brick which is a big attraction of the 800 MHz band, i.e. improve indoor coverage. At least that is the theory
Posted by bigluap about 1 year ago
dont look like that will give Three much more network coverage to relive their contention issues, currently they can only have 64 connections per mast, this will increase their capacity to 128, Glad as of April the 14th I will no longer be with Three. Not much use having a phone that cant get a dialing tone.
Posted by bigluap about 1 year ago
PS Three's executive office informed me that the rollout would be to denser customer areas first, so where I live may not see 4G until mid 2014.
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