BT will take part in UK auction, but only for 2.6GHz
Wireline incumbent will bid alongside the country's four cellcos, and private equity players could also take part
Published: 13 December, 2012
UK wireline incumbent BT is to bid in the upcoming LTE spectrum auction, it has emerged just after regulator Ofcom announced the closing of applications to take part in the sale. It will publish a full list of participants in a few weeks' time, but it is clear that BT, plus the four mobile operators (EE, Vodafone, Telefonica O2 and 3UK) have all paid their £100,000 deposit to take part.
The auction will start in January and probably last for several weeks, with operators expected to start rolling out LTE networks in their new frequencies from mid-year. EE (formerly Everything Everywhere) is already turning on commercial LTE services in the UK, using its refarmed 1.8GHz GSM spectrum.
It has been unclear whether BT, which sold its mobile arm (formerly Cellnet, later O2, and now part of Telefonica) in 2001, and since then has relied on MVNO deals to provide wireless services. Even now, it seems unlikely the incumbent would go head-to-head with the cellcos in conventional mobile services, given how overcrowded the UK already is. Instead, it might use spectrum for specialized or vertical services, or merely as an asset.
Five years ago - when the UK looked as though it would be Europe's first country to auction 4G spectrum in 2.6GHz and WiMAX was the main available technology option - BT hinted heavily that it would bid for licences and deploy a WiMAX network. This would have been mainly to fill in gaps in its wireline broadband and support enterprise applications, and the same thinking could still apply today (though with LTE). Another option, increasingly popular with new wireless entrants, would be to create a wholesale network to support small service providers and to offer offload services for the cellcos.
However, BT's obligations to deliver broadband to remote areas does not seem to be part of the strategy. According to the Financial Times, BT is only interested in the high capacity 2.6GHz spectrum, not the 800MHz digital dividend band, despite its suitability for providing broadband to rural areas. BT has been trialling unlicensed options for this purpose, notably white spaces in the TV spectrum.
The UK government will be pleased that there is at least one additional bidder beyond the four cellcos, since this could push up the price. The Treasury has said it expectd the auction to raise a total of £3.5 bn (€4.3bn), though many experts believe this is unlikely to be achieved. James Barford at Enders Analysis told the BBC: "Auctions are always very difficult to predict. What I would say is that if you look at the European auctions of LTE and expect the same prices in the UK, ours should raise about £2.5bn. I wouldn't say £3.5bn is beyond the realms of possibility, but it is a little hard to see. It was the same mobile phone companies, or least their parent firms, who participated in the European auctions as will do so in the UK."
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