The largest ever auction of spectrum for mobile services in the UK is set to get under way by the end of 2012, Ofcom announced today, laying the path for next-generation 4G networks to be rolled out next year.
The auction will offer the equivalent of three quarters of the mobile spectrum in use today - some 80% more than released in the 3G auction which took place in 2000.
The plans should see mobile broadband rolled out to at least 98% of people in villages, towns and cities across the UK. This will be achieved through 4G, the fourth generation of mobile technology, which will deliver much faster mobile data speeds to phones and other wireless devices than presently possible.
Ofcom has confirmed its decisions on the auction, including measures that will see next-generation mobile broadband become available to nearly everyone in the UK, creating substantial benefits for citizens and consumers.
To ensure that UK consumers continue to benefit from a competitive market, Ofcom has also decided to reserve some of the available spectrum for a fourth national wholesaler other than the three largest mobile operators.
Ed Richards, Ofcom Chief Executive, said: "The 4G auction has been designed to deliver the maximum possible benefit to consumers and citizens across the UK.
"As a direct result of the measures Ofcom is introducing, consumers will be able to surf the web, stream videos and download email attachments on their mobile device from almost every home in the UK."
The 4G auction will offer at least two spectrum bands - 800 MHz and 2.6 GHz. The lower frequency 800 MHz band is part of the 'digital dividend', which is ideal for widespread mobile coverage. The higher frequency 2.6 GHz band is ideal for delivering the capacity needed to deliver faster speeds. These two bands add up to 250 MHz of additional mobile spectrum, compared to 333 MHz in use today.
This combination of low and high frequency spectrum creates the potential for 4G mobile broadband services to be widely available across the UK, while offering capacity to cope with significant demand in urban centres.
Ofcom has concluded that UK consumers are likely to benefit from better services at lower prices if there are at least four credible national wholesalers of 4G mobile services.
Therefore, in the interests of competition, Ofcom has decided to reserve a minimum amount of spectrum in the auction for a fourth operator. This could be either Hutchison 3G or a new entrant altogether.
The spectrum bands will be auctioned to bidders as a series of lots. One of the 800 MHz lots of spectrum will carry an obligation to provide a mobile broadband service for indoor reception to at least 98% of the UK population by the end of 2017 at the latest.
The 800 MHz spectrum is well suited to providing high levels of coverage, and we anticipate that imposing the obligation on one operator will drive other operators to extend their own coverage in response.
Given that it is easier to provide coverage outdoors than indoors, a network meeting this obligation is likely to cover more than 99% of the UK by population when outdoors.
In addition to this UK-wide coverage obligation, Ofcom has decided to require that the same operator provides the same indoor service to at least 95% of the population of each of the UK nations - England, Northern Ireland, Scotland and Wales. Outdoor coverage for a network meeting this obligation is likely to be 98-99% of the population of each nation.
Ofcom intends to hold the auction as soon as possible. Alongside today's statement, it is publishing a draft of the legal instrument which implements the auction rules and gives effect to our decisions. This is subject to a statutory consultation closing on 11 September 2012.
Ofcom expects the auction process to start before the end of this year, with prospective bidders required formally to apply to take part. Those applications will then be assessed by Ofcom before the bidding phase starts, likely to be in early 2013.
Mobile operators are expected to start rolling out 4G networks using the auctioned spectrum from the middle of 2013, and to start offering 4G services to consumers later that year.
NOTES FOR EDITORS