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The UK, once set to be the first European country to auction 2.6GHz spectrum for '4G' services, is delaying its spectrum sale yet again. In November, regulator Ofcom indicated it hoped to award licenses by mid-2009, and in April it said it promised to hold the auction "as soon as possible". Now it has "withdrawn" that statement and, in the wake of the new Digital Britain report recommendations, will bundle the 2.6GHz and digital dividend spectrum sales into one super-auction next year.

The delay is a further blow for operators that had hoped to steal an early march in mobile broadband, especially those aiming to challenge the cellular incumbents, possibly with a WiMAX network. While a few countries, notably Sweden, have sold 2.6GHz licenses, most auctions will take place in 2010, as operators create strategies that also take account of the sale of analog TV spectrum around 800MHz; possible broadband stimulus initiatives in some markets; and the ruling, by many regulators, that 3G services can be expanded using current GSM frequencies around 900MHz.

Existing cellcos argue that they can only reach a meaningful valuation of the 2.6GHz licenses when the rules on all these other factors are made clear. This was one reason for the initial delays of the UK auction, which was once expected to have taken place over a year ago. It was held up by legal challenges by T-Mobile and O2, which sued Ofcom for trying to sell the licenses before it had completed its rulemaking on refarming 900MHz GSM spectrum for 3G - something that could reduce 3G carriers' need for 2.6GHz licenses, and certainly affect the spectrum's value.

The Digital Britain report has further complicated the UK auction picture, stating that it intends to implement the proposal of the independent spectrum broker to hold at least part of the 2.6GHz sale together with the award of the 800MHz band. "In light of the Government's intention to implement the ISB's proposals, including possibly directing us in this regard, and the further period of time which will elapse before any such direction is made, Ofcom considers that it is no longer appropriate to rely on its decision of 4 April 2008 to hold the award of the 2.6GHz band as soon as possible," the regulator said.

The UK auction is potentially the most significant sale of 2.6GHz licenses in the EU, because it is the most open to a new technology such as WiMAX and is regarded as a bellwether for various reasons. Ofcom has been more aggressive than many fellow regulators about opening up new bands with as few regulations as possible in order to encourage new services and new operators. And, unusually among European states, incumbent telco BT has no wireless networks, but is widely expected to re-enter the wireless market - which it quit when it spun off its mobile arm, now Telefonica-owned O2 - via a 2.6GHz license. It has shown a strong interest in WiMAX, and so could be the technology's route to a national network in the heartland of 3G and LTE. Also of interest to the WiMAX community is Ofcom's stance that it will leave 2.6GHz winners to decide whether to implement TDD or FDD networks, according to their business models, rather than defining the split between the two profiles, as most regulators are doing. This could make a license more attractive to a data-driven carrier, since TDD spectrum is advantageous for this model.

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