Ofcom prepares for 4G mobile auction
Ofcom has announced plans for the largest ever single auction of mobile phone spectrum in 2012 with the aim of enabling high-speed internet connectivity around the UK.
The additional spectrum, which is equivalent to three quarters of the mobile spectrum in use today and 80% more than the 3G auction which took place in 2000, is essential to meet the UK’s rapid increase in mobile traffic, according to Ofcom.
The rise of mobile traffic has been fuelled by the growth of smartphones and mobile broadband data services such as video streaming, email, messenger services, mapping services and social networking sites.
Ofcom said the new spectrum will provide much needed capacity for the fourth generation (4G) of mobile technology, set to deliver significantly faster mobile broadband services – approaching today’s ADSL home broadband speeds.
Ed Richards, Ofcom chief executive, said: “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.”
Under measures being proposed by Ofcom, the auction will include a combination of safeguards and coverage conditions to promote competition and significantly widen the coverage of mobile broadband to 95% of the UK population.
The auction will be for two spectrum bands – 800 MHz and 2.6 GHz. The lower frequency 800 MHz band is part of the digital dividend, which is being freed-up as the UK switches from analogue to digital TV. This spectrum is ideal for widespread mobile coverage.
The 2.6 GHz band is at a higher frequency, and is ideal for delivering the capacity needed to deliver higher speeds. These two bands add up to 250 MHz of additional mobile spectrum.
The combination of low and high frequency spectrum available in the 800 MHz and 2.6 GHz bands creates the potential for next generation mobile broadband services to be widely available across the UK, while at the same time having the capacity to cope with significant demand, even in urban centres.
Ofcom says there are risks to future competition if bidders are free to acquire any amount of spectrum in an open auction because access to new spectrum is scarce. The combination of these two factors – scarcity and demand – could create incentives for bidders to bid strategically and reduce the amount of spectrum available to other bidders, according to the regulator.
The UK mobile market is made up of four national wholesale operators, who sell mobile services to retailers, as well as directly to their own retail customers. Ofcom believes that competition at the national wholesale level is essential to future competition and maximising consumer and citizen benefits.
In addition, there would be a significant risk to national wholesale competition if there were fewer than four national wholesale competitors with credible spectrum portfolios for providing higher quality data services.
To guard against this risk, Ofcom proposes introducing limits both on the minimum and maximum amounts of spectrum bidders can win.
There will also be an obligation to cover a certain proportion of the population in particular areas, to ensure coverage in rural areas.
Ofcom aims to start the auction in the first quarter of 2012, subject to consultation.
Read the full statement here.