Ofcom Reveal Final UK 4G Mobile Broadband Auction Rules and Timetable

Ofcom has today announced the final regulations, reserve prices and timetable for its imminent auction of superfast 4G (LTE or WiMAX) compatible Mobile Broadband spectrum (800MHz and 2.6GHz), which will officially get underway on 11th December 2012 with the first services to launch in May or June 2013.

Mobile operators O2 and Vodafone had originally threatened to tie the auction up in legal challenges after Ofcom granted approval for EE (Orange UK and T-Mobile) to launch the country’s first 4G services over their existing 1800MHz band (here), which would have given the operator a big advantage (i.e. rivals couldn’t have launched 4G via 800MHz or 2.6GHz until Q4-2013).

Thankfully the situation was resolved last month when Ofcom, the government and all of the major mobile operators agreed to a solution that involved moving the final spectrum release phase forward by 5-6 months to complete in “the first half of 2013” (spring). As a result the official auction timetable has today been updated to reflect the deal.

Ofcoms Updated 4G Auction Timetable

11th December: The application day [provisional date – to be confirmed in two weeks]
— Prospective bidders submit their applications to Ofcom together with an initial deposit.

December: Qualification stage
— Applications are reviewed to determine who can go on to bid in the auction.

January: The principal stage
— Bidding begins. This could take a number of weeks. Bids will be placed online over secure internet connections, using software that has been developed specifically for the auction.

February/March: The assignment stage
— Bidders informed what they have won and its cost.

February/March: The grant stage
— Licence fees are paid and licences granted.

May/June: New 4G services launched
— New 4G services expected to go live from a range of providers.

Ofcom has also confirmed the reserve prices for the related spectrum, which comes to a “combined total” of £1.3 billion. The figure is well below what the 3G spectrum sold for some years earlier, although it’s only a reserve price and as a result mobile operators will need to bid higher in order to secure the necessary allocations. The prices break down as follows.

Most mobile operators and commentators tend to agree that the price of 3G was set far too high (in April 2000 it raised a total of more than £22 billion) and related services then took years to reach maturity before the investment could even start to be returned. The 4G auction is thus not expected to return anything like the dizzy heights of £22bn, with figures of £4bn to £6bn being thrown around by various groups and analysts.

Ed Richards, CEO of Ofcom, said:

“Today marks an important shift from preparation to the delivery of the auction, which will see widespread 4G mobile services from a range of providers. The entire industry is now focused on the auction itself, with a shared goal of delivering new and improved mobile services for consumers.”

Ofcom predicts that a “typical user” will receive initial download speeds of around 5-7 times faster than those for existing 3G networks, although this is obviously a highly variable service that can be affected by many different factors and thus experiences will vary (EE delivers around 8-12Mbps).

But it should be noted that the regulators estimate is based on its own two year old data, which found that 3G had an average speed of just over 1Mbps and thus it estimates 4G to deliver around 6Mbps. In July 2012 Ofcom told ISPreview.co.uk that it planned to release another study of Mobile Broadband speeds at “the beginning of next year at the earliest” (here).

The government and Ofcom want to see “at least” 98% of UK people gaining access to Mobile Broadband connectivity by the end of 2017, with the wider coverage of 800MHz expected to play a significant part in that work.