& cplSiteName &

UK 4G Auction Falls Short

Ray Le Maistre
2/20/2013
50%
50%

Following a relatively short process, the U.K. 4G spectrum auction is over, with all four existing mobile network operators, plus BT Group plc, securing new spectrum licenses for a total outlay of £2.34 billion (US$3.58 billion), regulator Ofcom announced early Wednesday. The outcome delivers few surprises, though the financial details raise some interesting questions. The winners are (in order of fees paid):

  • Vodafone Group plc -- £790.8 million for 2 x 10MHz in 800MHz band, 2 x 20MHz in 2.6GHz band and 1 x 25MHz in 2.6GHz band (unpaired).
  • Everything Everywhere Ltd. (EE) -- £588.9 million for 2 x 5MHz in 800MHz band and 2 x 35MHz in 2.6GHz band.
  • Telefónica UK Ltd. -- £550 million for 2 x 10MHz in 800MHz band (this is the license with coverage obligation -- see below)
  • Hutchison 3G UK Ltd. (3) -- £225 million for 2 x 5MHz in the 800MHz band.
  • Niche Spectrum Ventures (a BT subsidiary) -- £186.5 million for 2 x 15MHz in the 2.6GHz band and 1 x 20MHz in the 2.6GHz (unpaired).
"It's a good outcome for all the operators and Vodafone looks like it has done best in that it has the most spectrum and the best pick of the 800 MHz bands," says Heavy Reading Senior Analyst Gabriel Brown. "It also has enough capacity in the 2.6GHz band for the potential future expansion of its LTE services," he adds. With Telefónica UK (O2) also snapping up 2 x 10MHz in the 800MHz band, that leaves Hutchison 3G and EE sharing the remaining 800MHz band, with 2 x 5MHz each, "so they will have quite thin coverage at 800MHz, thinner than Vodafone and O2, so they won't be able to service as many users. However, both Hutchison and EE have LTE spectrum at 1800MHz, which Vodafone and O2 don't have, so it works out well for everyone," concludes Brown. But there are three losers -- namely, the two unsuccessful bidders, MLL Telecom Ltd. and HKT (UK) (a subsidiary of PCCW Ltd.), and the U.K. government's treasury. That's because the auction raised about £1 billion ($1.53 billion) less than the government had anticipated (and a fraction of the £22.5 billion raised from the 3G auction more than a decade ago, a crippling sum that cast a cloud over the British mobile services sector for years). The concern now is that the U.K. treasury will try to think of another way to extract money from the mobile sector to make up that shortfall. Hopefully that won't happen. The less the operators spend on the licenses, the more (in theory) they have available to invest, which, as Bengt Nordstrom, CEO at Swedish consultancy Northstream, notes is good news for the U.K. "The less U.K. operators are forced to pay for spectrum, the more they are able to invest in building 4G networks and developing new services," says the recently coiffed Nordstrom, who is determined to look his best for the upcoming Mobile World Congress parties. "The boost that 4G will contribute to UK GDP as a consequence will vastly outweigh the additional £1 billion they might have raised during this auction ... Treating the £2.34 billion raised during this auction as a missed opportunity for the UK treasury is extremely short-sighted," he adds in an emailed statement on the auction result. Perhaps the toughest investment task faces Telefónica UK: As Ofcom noted, the operator's license comes with an obligation to deliver "indoor reception to at least 98 percent of the UK population (expected to cover at least 99 percent when outdoors) and at least 95 percent of the population of each of the UK nations -- England, Northern Ireland, Scotland and Wales -- by the end of 2017 at the latest." As all mobile operators know, it's indoor coverage that's the toughest to deliver with any consistency and quality of service. — Ray Le Maistre, International Managing Editor, Light Reading

(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
186k
50%
50%
186k,
User Rank: Moderator
2/21/2013 | 10:32:02 AM
re: UK 4G Auction Falls Short
I think there's more to this auction in terms of surprises and questions than you seem to suggest

- Although the overall auction generated less than expected, this was because they appear to have paid a lot less for the 800 but 2600 was at the higher end of comparable European auctions. It looks like BT pushed up the 2600 prices

- Why didn't O2 bid for 2600 spectrum? This seems surprising as you'd think they'd want to have some 2600 in reserve for urban capacity in the future. Maybe they'll end up doing a deal with their old mates BT

- BT's bid is particularly exciting as I doubt they'd of paid as much if they didn't have some fairly expansive plans. Wouldn't be surprised if we get some sexy converged consumer services from them

- Was 3 able to acquire the 800 spectrum under the auction rules and was that why they seem to have paid less and also why they didn't bid for 2600 spectrum?

- I wonder if 3 and EE will end up working together with their respective 800 spectrum as they do network share on 3G. Maybe 3 will sell EE the 800 spectrum as part of some 4G wholesale deal?

From The Founder
Light Reading sits down at CES with the head of Cisco's service provider video business, Conrad Clemson, to discuss how NFV and cloud security relate to video, the challenge of managing 4K/8K traffic, the global expansion of Netflix and virtual reality.
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
LRTV Documentaries
All Change in Video

2|11|16   |   33:12   |   (1) comment


At this moderated panel at 2020 Vision in Dublin, Alan Breznick, Cable/Video Practice Leader of Light Reading, sits down with Jeff Finkelstein, director of network architecture at Cox Communications, to discuss the rapidly changing video market.
LRTV Custom TV
Hosting in Ireland, Past & Present

2|10|16   |   16:07   |   (0) comments


Garry Connolly, president of Host in Ireland, presents the keynote at Light Reading's 2020 Vision Executive Summit in Dublin.
Women in Comms Introduction Videos
What's Hot in Mobile Commerce?

2|10|16   |   12:18   |   (1) comment


Claire Maslen, financial services relationship manager at the GSMA, talks about the development of the digital commerce sector and the types of relationships that mobile operators are developing to further their m-commerce strategies.
LRTV Documentaries
EANTC Tests Nokia IP Routing & Mobile Gateway VNFs for Real World Deployment

2|9|16   |   5:08   |   (1) comment


Nokia obtained validation of its virtualized router and virtualized mobile gateway capabilities through rigorous testing performed by EANTC. The results set a new industry benchmark for outstanding performance, scalability, resiliency and manageability. Nokia VNFs are ready for telco cloud deployment, so that service providers can accelerate mobile, business and ...
Between the CEOs
CEO Chat With Level 3's Jack Waters

2|8|16   |   26:15   |   (1) comment


Light Reading CEO and founder Steve Saunders sits down with Level 3 Communications' CTO Jack Waters to discuss hot topics like virtualization, 4K and the future of telecom...
LRTV Custom TV
The Composable Telco

2|8|16   |   24:46   |   (0) comments


Heavy Reading's Principal Analyst Caroline Chappell presents the keynote at Light Reading's 2020 Vision Executive Summit in Dublin.
LRTV Custom TV
Join Us at the Digital Operations Transformation Summit

2|4|16   |   03:52   |   (0) comments


The Digital Operations Transformation Summit on February 21, 2016 at the Crowne Plaza Barcelona Fira Centre will bring together 50 senior executives to engage in a unique debate on the opportunities and challenges presented by the transformative evolving digital landscape. RSVP now at events@lightreading.com.
LRTV Custom TV
Making the Test: ADVA Ensemble Connector vs. Open vSwitch

2|4|16   |   01:28   |   (0) comments


Light Reading, in partnership with EANTC, recently tested ADVA's Ensemble Connector, which replaces open vSwitch and offers carrier-grade capability and interoperability. The test results strengthen ADVA's credibility as a provider in the virtualization space.
LRTV Custom TV
Bridging the Gap Between PoCs & Deployment in NFV

2|4|16   |   31:50   |   (0) comments


Charlie Ashton of Wind River presents the keynote at Light Reading's 2020 Vision executive summit in Dublin.
Between the CEOs
CEO Chat With Mike Aquino

2|3|16   |   17:34   |   (0) comments


The former CEO of Overture Networks, Mike Aquino, discusses why truly open virtualization solutions provide service providers with the greatest choice.
Shades of Ray
MWC: Buckle Up for 5G & the IIoT

2|2|16   |   02:28   |   (0) comments


This year's Mobile World Congress looks set to be a 5G land grab and a chance to get down and dirty with the Industrial Internet of Things (IIoT) – but what will the 5G discussions actually be about?
LRTV Custom TV
Case Study: Building China's Next-Gen TV Networks

2|2|16   |   5:01   |   (0) comments


With over 2 billion viewers worldwide, Shenzhen Media Group is one of China's largest content producers. By partnering with Huawei and Sobey, SZMG was able to modernize media operations with the Converged News Center, a production studio that is a model for next-generation workflows.
Upcoming Live Events
March 10, 2016, The Cable Center, Denver, CO
April 5, 2016, The Ritz Carlton, Charlotte, NC
May 23, 2016, Austin, TX
May 24-25, 2016, Austin Convention Center, Austin, TX
All Upcoming Live Events
Hot Topics
AT&T Lights Fire Under 5G, Plans 2016 Trials
Iain Morris, News Editor, 2/12/2016
Yahoo & Verizon Sitting in a Tree...
Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 2/8/2016
Vodafone: Flexible Work Policies Boost Profits
Sarah Thomas, Editorial Operations Director, 2/8/2016
It's Time to Integrate OTT Video
Alan Breznick, Cable/Video Practice Leader, 2/8/2016
Andreessen Facepalms on Facebook Free Basics
Mitch Wagner, West Coast Bureau Chief, Light Reading, 2/10/2016
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Light Reading CEO and founder Steve Saunders sits down with Level 3 Communications' CTO Jack Waters to discuss hot topics like virtualization, 4K and the future of telecom...
The former CEO of Overture Networks, Mike Aquino, discusses why truly open virtualization solutions provide service providers with the greatest choice.
Live Digital Audio

Broadband speeds are ramping up across Europe as the continent, at its own pace, follows North America towards a gigabit society. But there are many steps to take on the road to gigabit broadband availability and a number of technology options that can meet the various requirements of Europe’s high-speed fixed broadband network operators. During this radio show we will look at some of the catalysts for broadband network investments and examine the menu of technology options on offer, including vectoring and G.fast for copper plant evolution and the various deployment possibilities for FTTH/B.