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4G über-auction coming next year

Ofcom pledges high speed access for all, maybe

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Ofcom has started consultations on how to run the biggest spectrum auction the UK has ever seen, though it seems maintaining the status quo is the name of the game.

The mega-auction includes 250MHz of spectrum, much of which is released by the switch to digital television (the "digital dividend"). Ofcom is hoping the sell-off will see high-speed wireless being offered by four network operators across the UK, but the regulator is having a hard time crafting a process capable of ensuring that happens.

This auction, which is intended to take place in about a year, certainly won't raise the £22bn that the operators paid for their 3G licences in 2000, despite including nearly twice the number of frequencies, and more attractive ones too. The mega-auction will likely only raise a tenth of that revenue, but Ofcom is more concerned with ensuring that all four existing players get enough radio waves to keep them in business, while making a nod or two to the prospect of new entrants just for effect.

The consultation (PDF/133 pages/843KB, and really interesting if you like that kind of thing) proposes capping spectrum ownership to ensure we end up with four competing networks, as well as imposing coverage requirements on one of the licences and also optimistically suggesting that low-power providers might like to aggregate their bids to compete with the big boys.

Three is the most vulnerable of those big boys, and it has been loudly proclaiming that unless it gets a share of the new spectrum it will take its toys and leave. Three has no spectrum in the much-desired band below 1GHz, which has better propagation than the 2.1GHz band where 3G services currently exist, and CEO Kevin Russell has been arguing that without access to some prime spectrum it won't be able to compete with Vodafone and O2.

Everything Everywhere also lacks low-frequency bands, though it offsets that deficiency by having loads of spectrum around 1.8GHz which is currently used for 2G services.

Ofcom, it seems, has heard Three's pleas and will cap spectrum ownership by any one company at 210MHz, with an additional cap of 55MHz on spectrum below 1GHz. Those caps come with the stated intention of ensuring that after the auction there are still four players in the market.

This should satisfy Three, though how the other operators will react is harder to predict. Ofcom is pushing a very aggressive timetable for the mega-auction; the consultation closes at the end of May, and the auction taking place in the first half of next year. But legal challenges from the operators could easily delay that by months, or even years, if they feel unfairly discriminated against. ®

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