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BT's 4G bid WON'T lead to mobile network launch

It's a low-powered red herring

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BT is among the bidders registered with Ofcom as hoping for a slice of 4G spectrum, prompting speculation of a return to mobility and a contested auction, but the truth is almost certainly a good deal less interesting.

There are three new entrants on Ofcom's list of companies that have registered to bid in the 4G auction, prompting speculation that new players (and one old player: BT has form in mobile) will be jumping into the UK mobile business, but it's far more likely that two of the three have their eyes on the low-power licences, with which they can offer campus-wide networks with national roaming, leaving only the third to promise any kind of disruption and not in the most obvious of ways.

The UK treasury might have been hoping that seven bidders would force the four incumbents into a fight, leading to a bonanza of Dutch proportions as the new entrants cascade cash onto the table in the hope of grabbing some frequency, but that's astonishingly unlikely.

The main spectrum licences will get divided between the four incumbents as one would expect; there are four lots at 800MHz and there will be some jockeying for position as everyone wants at least two of those - but the split won't be shocking.

The 14 FDD (Frequency Division Duplex - which uses one frequency to send and another to receive) lots at 2.6GHz won't really be contested at all - the four operators will divide them up. Meanwhile, BT and MLL Telecom will be bidding for low-power licences which can coexist with national operators just as the GSM guard-band operators do today.

That means BT, and MLL, will be able to offer enterprise customers their own 4G network, on which they can use standard handsets and roam seamlessly onto one of the national carriers when they leave the campus. Such networks are commonplace on 2G, using low power spectrum at 1800MHz and GSM guard bands (frequencies too close to the national users for full-power transmission), supplied by numerous companies, so it's entirely unsurprising to see such names bidding for the 4G equivalent.

MLL bid for some L-Band frequencies back in 2008 but was outbid by Qualcomm, which snapped up the entire band and has left it fallow ever since (Qualcomm wanted it for MediaFLO broadcast TV, which never launched following its failure in the US).

BT could be planning something else, the name of registered subsidiary, "Niche Spectrum Ventures", suggests the kind of crude bluff which would amuse BT execs, though it's equally likely a double bluff and the idea of BT launching a new national operator requires more evidence than that.

Which just leaves the final bidder, PCCW, owner of UK Broadband, which already has great swaths of bandwidth and launched the UK's first 4G network in October, pipping EE to the post ... but at 3.5GHz, so no-one noticed. PCCW, we wager, is not interested in low-power licensing but isn't about to try and outbid Vodafone et al either. This leaves only the 50MHz block in the middle of 2.6MHz reserved for Time Division Duplex (TDD) - which fits the UK Broadband modus operandi perfectly.

TDD is dismissed by "proper" telcos, which like to have one frequency for talking and one for listening (FDD), even if one of them is empty most of the time. The operators got burned badly during the 3G actions buying W-CDMA (3G) TDD spectrum - which remains unused to this day, as compatible handsets never arrived, and they remember that mistake well.

But TDD LTE handsets do exist, and last week China Mobile (using Ericsson kit) deployed a network in Hong Kong that can hand off between TDD and FDD, so this time around the TDD spectrum is a much better buy, especially if no one else is going to bid for it.

So there we have it - the status quo is maintained and the UK keeps four national operators. Enterprise customers get 4G networks covering their campus sites and the UK treasury has to rely on taxes to pay off the national debt, while consumers hope the low auction price will be reflected in cheaper rates. Meanwhile, the clever money keeps a careful eye on PCCW and the potential of TDD to be properly disruptive. ®

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