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4G auctions raise £2.3bn as UK government projections fall short

20 Feb 2013
Mobile spectrum antenna against sunset

The UK's 4G spectrum auctions have raised just £2.3bn for the government, short of its estimate of £3.5bn, with O2, Vodafone, EE, Three and BT all securing holdings in either the 800MHz or 2.6GHz bands.

Vodafone paid the most at £790m to secure blocks at both 800MHz and 2.6GHz, while EE paid £588m for blocks in both bands as well.

O2 paid £550m for holdings in the "coverage obligation lot", meaning it must ensure it covers 98 percent of the population with its holding in the 800MHz band.

Three paid £225m for two blocks in the 2.6GHz band and BT paid out £186m for three blocks in the 2.6GHz band, to help it meet its commitments on delivering broadband across the nation.

"This spectrum will complement our existing strategy of delivering a range of services using fixed and wireless broadband," said BT chief executive Ian Livingstone.

In total the figure of £2.3bn is notably lower than the £3.5bn figure estimated by the government in its Autumn Statement.

This will cause considerable embarrassment for the government as it now has a £1bn hole in its calculations.

Despite this, Ofcom chief executive Ed Richards attempted to put an upbeat spin on the results, claiming it was a "positive outcome for the UK".

"This will lead to faster and more widespread mobile broadband, and substantial benefits for consumers and businesses across the country," he said.

"4G coverage will extend far beyond that of existing 3G services, covering 98 percent of the UK population indoors, which is good news for parts of the country currently underserved by mobile broadband."

However, Ovum analyst Matthew Howett said while the figure was bad news for the government, operators would be delighted with the outcome.

"Despite all the noise being made about the UK's 4G auction, what you can't hear is the sound of champagne corks popping over at the Treasury as Ofcom's 4G auction fails to raise George Osborne's optimistic expectation of £3.5bn," he said.

"For the mobile operators there must be widespread relief the amount paid is a mere fraction of the £22.5bn they were asked to cough up during the 3G licencing process."

The close of the auctions marks the end in a long and bitter chapter in the UK's telecoms market, with the auctions for the spectrum holdings dogged by in-fighting, delays and the threat of legal action, with the government forced to mediate between the firms to keep the process on track.

This included Ofcom giving EE a headstart in the 4G market by allowing it to reuse its 1800MHz spectrum for superfast services, which it has been doing since November 2012. However, the firm has been coy on the uptake among customers so far, suggesting it has not been wildly popular.

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Dan Worth

Dan Worth is the news editor for V3 having first joined the site as a reporter in November 2009. He specialises in a raft of areas including fixed and mobile telecoms, data protection, social media and government IT. Before joining V3 Dan covered communications technology, data handling and resilience in the emergency services sector on the BAPCO Journal

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