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The UK was once going to be the first country in Europe to auction 2.6GHz spectrum, a '3G expansion' sale that could have happened as early as 2007. Now it is unlikely to take place even in 2010, leaving carrier plans for LTE or WiMAX on hold. Kip Meek, the government appointed independent spectrum broker, says a 2010 auction is now "a real stretch" and 2011 is the probable date.

The auction was originally delayed by a legal challenge from the UK arms of T-Mobile and O2, which argued that they could not put a realistic valuation on the new bands until regulator Ofcom had clarified its policy on refarming GSM spectrum. That in turn would require a settlement of the long running dispute over whether O2 and Vodafone, the only holders of that lower band GSM spectrum in 900MHz, should be forced to redistribute their holdings, which are valuable for cost effective rural coverage.

Now, other factors are causing delays - the proposed merger of T-Mobile UK and Orange UK, which could break existing spectrum caps even without new allocations; and the decision to sell the 2.6GHz licenses in tandem with the digital dividend spectrum around 800MHz.

Meek's latest update was reported by online newspaper ZDNet UK (www.zdnet.co.uk), at a Westminster eForum on the spectrum implications of the digital switchover. Meek said the outcome of his proposals for 2.6GHz allocation was "uncertain" because of operator concern over the TMo-Orange merger, and there is threatened legal action from British Telecom. He told ZDNet: "The government will be considering its response to the consultation paper, [but] that process is taking longer than originally anticipated. They will have to take a view whether, in the dying months of this government, they will want to push through with this particular set of proposals."

Meek wants Vodafone and O2 to receive 800MHz allocations only if they surrender an equal amount of 900MHz spectrum. And TMo and Orange should be able to bid only for limited amounts of 2.6GHz, unless they give up some holdings at 1.8GHz or 2.1GHz. He has also proposed making 2.1GHz 3G licenses indefinite in length, in return for commitments from cellcos to improve 3G coverage. Currently, they are due to expire in 2020.

This last idea is the one that could incur BT legal challenges. The incumbent has described it as "a gift of severalbn pounds from the UK taxpayer to the mobile operators". BT spun off its own cellular arm, which became O2 and is now owned by Telefonica. BT was widely expected to bid for a 2.6GHz license and run WiMAX in it, primarily as a wholesale network or to support new business models such as machine-to-machine. The longer the delay, the more difficult it will be for WiMAX to make an impact on the already over-competitive UK market.

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