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Ofcom sets LTE reserve price at £1.3bn

UK regulator says bidders for 4G spectrum must apply by December 11, while licences will be granted in February or March


Published: 12 November, 2012

READ MORE: Spectrum | UK | Regulator | LTE

UK regulator Ofcom has announced that the total reserve price for its much delayed auction of 4G spectrum will be £1.3bn ($2bn). The organization has published its final auction rules and set a provisional deadline for applications of December 11.

The auction should take place early next year, enabling Vodafone and O2, in particular, to roll out LTE services in the summer to compete with those of EE, which has already gone live with 4G offerings in its refarmed 1.8GHz GSM spectrum. The headstart Ofcom handed the largest cellco by allowing early deployment in this band - which only EE currently holds - was the topic of much dispute and threatened legal challenges. But various concessions - notably on rules to get the 800MHz spectrum cleared swiftly for LTE following the auction - finally achieved a truce between the UK's four cellcos, after years of delays as the operators squabbled over spectrum allowances and caps, particularly in sub-1GHz bands.

Assuming Vodafone and O2 gain spectrum in the auction of 800MHz and 2.5GHz frequencies, the will be able to launch commercial LTE services from next summer. They consider their own GSM spectrum, in 900MHz, less suited to refarming at this stage than EE's 1.8GHz. The fourth cellco, 3UK, is to receive 25% of EE's 1.8GHz spectrum as a condition of the larger firm's merger, and is also presumed to participate in the auction. It has been a vocal lobbyist for rules which would ensure all the valuable 800MHz digital dividend licences did not fall into the hands of the big three (3UK has no GSM spectrum to refarm).

There is speculation over which other organizations might bid - incumbent wireline telco BT, and pay-TV giants BSkyB and Virgin Media, are possible candidates, though Virgin has said it will not bid for its own spectrum, despite carrying out test of LTE small cells in London.

Announcing the auction rules, 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." A 4G consumer page has also been launched by Ofcom today, offering information on the auction and consumer benefits from the new services.

According to the timetable, operators must put down a deposit by December 11 and in January, those cleared to bid will take part in an online auction, using secure connections and software that has been developed specifically for the process. Successful bidders will learn which frequencies they have won, and the final price, in February or March and then licences will be granted on payment, allowing services to go live from May or June.

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