4G auction results leave hole in Chancellor's Budget
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
|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)
|O2 - Telefonica UK ltd||2 x 10 MHz in 800 MHz band
(the coverage obligation)
|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)
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.