UK could hold 2.6GHz and dividend auctions this year

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UK could hold 2.6GHz and dividend auctions this year

But process could be stalled again by carriers' legal action

By CAROLINE GABRIEL

Published: 15 March, 2010

READ MORE: Spectrum | UK | Regulator | LTE

The UK has experienced almost as many delays to its next round of spectrum auctions as India, and now seems likely to sell the 2.6GHz and the digital dividend licenses at the same time, a decision that has delayed the 2.6GHz process, which was once expected in 2008. Regulator Ofcom may get the licenses to market before the end of this year, though, rather than waiting until 2011 as government sources recently indicated.

According to reports by ZDnet, proposals for spectrum allocation in 800MHz and 2.6GHz, as well as plans for existing 2G and 3G bands, were sent from the government to Ofcom last week.

These have introduced significant changes to the original plans submitted by Kip Meek, a former senior official at Ofcom, in May 2009, based on the subsequent consultation process. Some amendments have also been made in light of the recently approved merger of T-Mobile's and Orange's UK arms, which should be finalized this year. The main change is to require successful bidders for two of the 800MHz licenses to roll out coverage to 99% of the UK population, in line with hopes of using the low level frequencies to improve rural broadband access.

The spectrum cap for any operator has been increased, from 2 x 60MHz to 2 x 90MHz, which should ease the TMo-Orange merger, and as expected, existing 2G bands can be refarmed for 3G and 4G, while licenses will become indefinite and tradeable.

Stephen Timms, Digital Britain Minister, said: "The release of new spectrum will speed up the realization of next generation mobile broadband, benefitting mobile users across the country." However, hopes of a 2010 auction could fade, as in Germany, if some cellcos decide to take legal action. While the original 2.6GHz auction plan was derailed when T-Mobile filed a lawsuit, pushing for decisions on refarming to be taken to enable a realistic valuation of the new bands, this time The Financial Times says it will be O2 and Vodafone that could go to court. They are the only holders of 900MHz 2G spectrum in the UK.

Whatever the results of the auctions, the UK may well end up with only two network infrastructures soon. 3 and T-Mobile already share their network and will be joined by Orange post-merger, while Vodafone and O2 are expected to extend their own more limited sharing deal in response. Other European carriers must follow suit if they are to reduce costs and meet rising expectations for data rates and network quality, commented Graham Baxter, CTO at 3 UK, in an interview with Bloomberg this weekend.

Telefonica and Vodafone last year agreed to share some network components, such as masts, in countries including the UK and may also merge some cell sites.