Light Reading
All existing network operators get 4G spectrum but auction raises much less than expected

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
186k
50%
50%
186k,
User Rank: Light Beer
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?

Educational Resources
sponsor supplied content
Educational Resources Archive
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Custom TV
Using Service Quality to Drive WiFi Monetization

10|22|14   |   6:51   |   (0) comments


Live from the SCTE conference: Heavy Reading's Alan Breznick explores the forces shaping the WiFi opportunity in an interview with CableLabs' Justin Colwell and Amdocs' Ken Roulier.
LRTV Custom TV
Distributed Access Architectures – 2

10|21|14   |   8:51:00 AM   |   (0) comments


ARRIS CTO Network Solutions Tom Cloonan discusses why many if not most MSOs will continue with integrated CCAP, while addressing why some are also looking at two futuristic, distributed access architectures: Remote PHY and Remote CCAP.
LRTV Custom TV
Distributed Access Architectures – 1

10|21|14   |   9:01   |   (0) comments


SCTE Sr. Director of Engineering Dean Stoneback discusses the pros and cons of distributed access architecture (DAA) and its various forms, which range from basic Remote PHY to full CMTS functionality in the node.
LRTV Custom TV
The WiFi Road to Riches – 2

10|21|14   |   3:58   |   (0) comments


ARRIS Senior Solution Architect Eli Baruch talks about how MSOs can enable public and community WiFi through 1) outdoor access points, 2) businesses seeking to offer WiFi to customers, and 3) residential WiFi gateway extensions.
LRTV Custom TV
The WiFi Road to Riches – 1

10|21|14   |   10:15   |   (0) comments


SCTE Director of Advanced Technologies Steve Harris discusses WiFi deployments, drivers, challenges and advances, including 802.11ac, carrier-grade WiFi, community WiFi, Hotspot 2.0, Passpoint, WiFi-First and voice-over-WiFi.
LRTV Custom TV
Advantech Accelerates 100G Traffic Handling

10|17|14   |   7:56   |   (0) comments


Paul Stevens from Advantech explains why handling 100GbE needs a whole new platform design approach and how Advantech is addressing the needs of equipment providers and carriers to give them the flexibility and performance they will need for SDN and NFV deployment.
LRTV Huawei Video Resource Center
Holland's Imtech Traffic & Infra Discusses Huawei's ICT Solution and Services

10|16|14   |   4:49   |   (0) comments


Dimitry Theebe is from the business unit at Imtech Traffic & Infra which delivers communications solutions for transportations. His partnershp with Huawei began about a years ago. In this video, Theebe speaks more about this partnership and what he hopes to accomplish with Huawei.
LRTV Huawei Video Resource Center
Huawei's Comprehensive Storage Solutions Vital for SVR

10|16|14   |   6:16   |   (0) comments


SVR Information Technology provides cloud services for academic and special sectors. With Huawei's support, SVR and Yildiz Technical University has established Turkey's largest and most advanced High Performance Computing system. CSO Ismail Cem Aslan talks about what he hopes Huawei's OceanStor storage system will bring for him.
LRTV Huawei Video Resource Center
Mexico's Servitron's Impression of Huawei at CCW 2014

10|16|14   |   6:35   |   (0) comments


Servitron is a network operator in Mexico that has been in the trunking industry for the past 20 years. Its COO, Ing. Ragnar Trillo O., explains at Critical Communications World 2014 that his company has been interested in the long-term evolution of LTE technology and its adoption for TETRA.
LRTV Huawei Video Resource Center
Building a Better Dubai

10|16|14   |   2:06   |   (0) comments


Abdulla Ahmed Al Falasi is the director of commercial affairs, a telecommunications coordinator for the government of Dubai. Their areas of service span across multiple industries, including police, safety, shopping malls and more. In this video, Abdulla talks about his department's work with Huawei.
LRTV Huawei Video Resource Center
Huawei Lights Up Malaysia Partner Maju Nusa

10|16|14   |   1:59   |   (0) comments


Malaysia's Maju Nusa is an enterprise partner to Huawei in networking, route switches and telco equipment. At this year's Critical Communications World in Singapore, CTO Pushpender Singh talks about what Huawei's eLTE solutions mean to his company and for Malaysia.
LRTV Custom TV
Evolving From HFC to FTTH Networks

10|15|14   |   2:19   |   (0) comments


Cisco's Todd McCrum delves into the future of cable's HFC plant, examining how DOCSIS 3.1 and advanced video compression will extend its life and how the IP video transition will usher in GPON and EPON over FTTH.
Upcoming Live Events
October 29, 2014, New York City
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
February 10, 2015, Atlanta, GA
June 9-10, 2015, Chicago, IL
Infographics
WhoIsHostingThis.com presents six of the world's most extreme WiFi hotspots, enabling the most epic selfies you can imagine.
Hot Topics
Analysts Warn of Major NFV Gaps
Carol Wilson, Editor-at-large, 10/22/2014
Is Health the Killer App for the IoT?
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 10/22/2014
Drones Hover Over the IoT Sector
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 10/23/2014
1959 Newsreel: Make Phone Calls – From Cars!
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/24/2014
Meet the Phantom Network for NFV
Ray Le Maistre, Editor-in-chief, 10/23/2014
Like Us on Facebook
Twitter Feed