Ofcom says 4G phone auction faces delay

Ofcom has warned that there could be a delay to the auction of the UK’s next-generation, 4G mobile phone spectrum, scheduled for the first half of 2012, as the regulator struggles to resolve legal and technical issues.


Ofcom has already moved its guidance for the timing from the first quarter to the first half of 2012 and on Tuesday said even this schedule was “ambitious”. It is expected to publish its final plans for the auction in November.


The air waves in the 4G auction will be suitable for rolling out LTE technology, which will allow fast internet browsing on tablet computers and smartphones.


A number of countries, including Japan, the US and Germany, already have 4G spectrum, but its deployment in the UK has been delayed by legal disputes between mobile operators.


As use of data-hungry smartphones and tablets grows, operators are coming under increasing pressure to obtain more spectrum. Delays are particularly harmful to Hutchison Whampoa’s 3, the UK’s smallest mobile phone operator, which has less capacity than its competitors.


Any delay in the auction could also harm the government’s plan for the UK to have the best superfast broadband infrastructure in Europe by 2015. However, Ofcom is having to structure the auction carefully, to ensure continuing competition and to protect 3.


The regulator has proposed a complex system of spectrum “floors” and “caps” to ensure that all operators will emerge from the auction with a minimum amount of the most valuable sub-1GHz bandwidth, but no one business will own too much. Due to the strict rules, analysts expect the auction to raise about £2bn ($3.2bn) for the government, compared with the £22.5bn raised by the auction of 3G spectrum in 2000.


Each of the operators has objected to different elements of the plan, and there have been thinly veiled threats of legal action from companies including O2.


In addition, Ofcom said a number of technical problems still had to be solved. Part of the 4G spectrum is being used by digital terrestrial television – known as “Freeview” – which needs to be relocated. And some of the 4G spectrum potentially interferes with air traffic control systems.


“We note that because these technical issues need to be satisfactorily resolved before new networks can be built, it will not be possible for mobile operators to start rolling out 4G until during the course of 2013 at the earliest regardless of when the auction itself takes place,” Ofcom said.


06.09.2011 - ft.com