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UK 4G spectrum winners announced

EE, Vodafone, O2, 3UK and BT all won LTE spectrum in the UK

EE, Vodafone, O2, 3UK and BT all won LTE spectrum in the UK

The UK’s four mobile network operators and a subsidiary of fixed line incumbent BT have won LTE spectrum, regulator Ofcom has announced. But bidding was cautious, with the auction raising £2.34bn; £1bn less than the UK Treasury had hoped.

EE, 3UK, O2, Vodafone and Niche Spectrum Ventures Ltd – a subsidiary of BT –  all won spectrum after more than 50 rounds of bidding. 250MHz of spectrum was auctioned in two separate bands: 800MHz and 2.6GHz. This is equivalent to two-thirds of the radio frequencies used today by connected devices such as tablets, smartphones and laptops, said Ofcom.

The 800 MHz band is part of the digital dividend freed up when analogue terrestrial TV was switched off, and is ideal for geographical reach and in-building penetration. The higher-frequency 2.6 GHz band is more suited to delivering the capacity needed for faster speeds in urban areas.

Vodafone paid close to £800m for 85MHz worth of spectrum in total, including 2x20MHz of 2.6GHz. EE paid £588m for its 85MHz of spectrum, which included 2x35MHz of 2.6GHz spectrum Meanwhile O2 spent £550m for 2x10MHz of 800MHz, the lot of spectrum to which Ofcom attached a coverage obligation to provide a mobile broadband service for indoor reception to at least 98 per cent of the UK population by the end of 2017.

Winning bidder Spectrum won Base price
Everything Everywhere Ltd 2 x 5 MHz of 800 MHz and
2 x 35 MHz of 2.6 GHz
£588,876,000
Hutchison 3G UK Ltd 2 x 5 MHz of 800 MHz £225,000,000
Niche Spectrum Ventures Ltd (a subsidiary of BT Group plc) 2 x 15 MHz of 2.6 GHz and
1 x 20 MHz of 2.6 GHz (unpaired)
£186,476,000
Telefónica UK Ltd 2 x 10 MHz of 800 MHz
(coverage obligation lot)
£550,000,000
Vodafone Ltd 2 x 10 MHz of 800 MHz,
2 x 20 MHz of 2.6 GHz and
1 x 25 MHz of 2.6 GHz (unpaired)
£790,761,000
Total £2,341,113,000

Source: Ofcom

Olaf Swantee, CEO of EE, which launched LTE in refarmed 1800MHz spectrum last year, said the firm was “extremely pleased” with the outcome of the spectrum auction.

“Coupled with our existing 1800MHz 4G network, it consolidates our position as the most advanced, largest and most capable 4G operator in the UK,” he said. “The acquisition of low and high frequency spectrum allows us to boost our superfast data services and coverage – indoors and outdoors, in cities and the countryside.

Vodafone UK chief executive Guy Laurence stressed benefits to the end user. “This is great news for our customers. The next generation of mobile internet services will bring real benefits to both consumers and businesses.”

O2 CEO Ronan Dunne said the operator’s intention is to “go beyond what has already been offered in the market” and give customers a “unique and exclusive range of digital experiences”.

Meanwhile, Dave Dyson, CEO at 3UK pointed out that the operator has more than doubled its spectrum holdings in the past 12-months thanks to spectrum acquired at auction and outside the auction process.

“Doubling our capacity allows us to continue our growth with significant headroom to increase our current base of over 8 million customers,” he said. “Consumer appetite for enjoying the internet via mobile devices continues to grow, playing to our strengths. With a significantly increased spectrum holding we will continue to be the competitive force in the UK mobile market.”

3UK has already indicated that it will not price LTE at a premium.

And BT chief executive Ian Livingston added that the firm has said that it does not intend to build a national mobile network. Instead, this spectrum will complement BT’s existing strategy of delivering a range of services using fixed and wireless broadband.

“We want our customers to enjoy the best possible connections wherever they are and this spectrum, together with our investment in fibre broadband, will help us achieve that,” he said.

MLL Telecom and HKT also qualified to bid but were not successful in their attempts.

Gary Marven, CEO at MLL Telecom admitted that the firm was disappointed not to have won any spectrum. “The auction process has helped us analyse different markets and opened up a number of opportunities that we are pursuing,” he said. “Looking forward we see the allocation of the spectrum through the auction opening the door to increased levels of connectivity and mobility in the UK. MLL Telecom will continue to support our mobile operating customers, build networks in remote areas and help the public sector with their networks while driving new areas such as connecting the growing number of small cell deployments.”

The winning bidders now have until February 21, 2013 to pay for their prizes. One stage in the auction remains, which will determine where in the 800MHz and 2.6 GHz bands each winning bidder’s new spectrum will be located. Bidding in this final stage – called the ‘assignment stage’ – will take place shortly, said Ofcom.

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