December 20, 2012

Four 4G Licences – 7 bidders in the auction

Things have become clearer with the status of the UK’s 4G auction which is currently underway. Ofcom has confirmed that a total of seven potential 4G licence holders have submitted an application to land one of the four 4G licences on offer.

This means that Ofcom have already received £700K as each application incurs a non-refundable £100K application fee. The 4G auction is believed to earn the UK government between £2 billion and £3.5 billion with a reserve price of £1.2 billion set by the government.

The seven successful bidders are :

    Everything Everywhere Limited ( UK )

    HKT (UK) Company Limited ( a subsidiary of PCCW Limited )

    Hutchison 3G UK Limited ( Three )

    MLL Telecom Ltd

    Niche Spectrum Ventures Limited (a subsidiary of BT Group plc )

    Telefónica UK Limited ( O2 )

    Vodafone Limited

Ofcom has an agreement with Vodafone, O2 and EE that they are assured of a 4G Licence in either the 800MHz or 2.6GHz frequency bands. However, they are still in competition to outbid the others to win the spectrum they have applied for.

The fourth 4G licence is reserved for a national wholesaler ( Ofcom’s wording ) and has frequency spectrum which can be awarded within the 800Mhz band ( 3 chunks of spectrum ) and the 2.6GHz band  ( 2 chunks of spectrum ).

The fourth 4G licence will be awarded to the highest bidder who must also meet Ofcom’s stringent rules for UK population coverage and data handling requirements. Vodafone, O2 and EE are not allowed to bid for the fourth licence so the fourth licence will be awarded to one of the following :

HKT (UK) Company Limited ( a subsidiary of PCCW Limited )

Hutchison 3G UK Limited ( Three )

MLL Telecom Ltd

Niche Spectrum Ventures Limited (a subsidiary of BT Group plc )

Ofcom has stated that  “rural 4G broadband coverage” will be an important factor in the award of any 4G licence. Now that the 4G Licence applicants have been identified the auction will commence in January 2013. The new 4G licences will offer up over 75% more frequency spectrum than currently available. This is definitely needed as we have seen the demand for mobile data double in the last 18 months.

Ed Richards, Ofcom Chief Executive, said: ‘The 4G auction will be a competitive process that will dictate the shape of the UK mobile phone market for the next decade and beyond.