The 4G Spectrum: Let The Bidding Begin


The 4G Spectrum: Let The Bidding Begin

Ofcom, the independent regulator and competition authority for the UK communications industries, is auctioning off the 4G spectrum this week. As you may or may not be aware, 4G is the next generation of mobile communications (after third generation 3G), that boasts faster upload and download speeds designed to make web browsing on a mobile device quick and efficient. These services use a specific part of the airwaves set aside for all manner of things such as television, military communications, and existing mobile networks. And it’s that part that is being sold off.

4G Spectrum Auction

With the 4G spectrum up for grabs, any mobile network wanting to offer 4G services will need to buy a slice to offer quicker data speeds to customers. But what is 4G worth to the companies that are vying for it? Here’s the lowdown on the auction process…

How does the auction work?

The 4G spectrum being auctioned off is split into two bands, 800MHz and 2600MHz. The 800MHz band is the one most bidders will be after because its lower frequency means it can travel further, meaning wider network coverage from those companies that use it. The higher frequency 2600MHz band is also desirable as it is ideal for delivering the capacity needed to offer faster speeds.

Ofcom will manage the 4G spectrum auction

Ofcom is making sure whoever bags the best frequency will not only have great power but also great responsibility. Those network providers that manage to snap up a piece of the 800MHz band will be obliged to provide indoor mobile broadband to 98% of the UK’s population by the end of 2017. This will fulfil the promise, made by the likes of EE, that 4G will provide internet to rural areas that at present cannot utilise 3G or home broadband.

All the interested parties that wish to buy a portion of the spectrum will need to draw up a plan to present to Ofcom. The spectrum has been divided into 28 lots, so each company may want to bid for a combination of these lots creating their own individual 4G packages. It will then be up to Ofcom to select the companies who present the best business plans, not only in terms of what they are offering financially, but also what they can offer consumers in terms of innovation.

Who is bidding?

Networks involved in the 4G spectrum auction

At the moment there are four mobile networks in the running to bid for a slice of the 4G Spectrum: Vodafone, Three, EE and O2

Alongside these networks, UK telecoms companies BT and MLL, and Hong Kong IT company PCCW are also planning to bid for the available lots. It has been reported that the auction will generate around £3.5bn for the Treasury (in contrast the auction of the 3G spectrum in 2000 raised a staggering £22.5bn).

What does this mean for you?

Well, at present if you wanted to get in on the 4G action you would have to plump for a contract from EE as it is the only network provider currently offering the high speed data connection. However, EE has been criticised over its 4G tariffs which many claim are too high. EE’s 4G packages start at £36 a month for 500MB data (a feature film is around 700MB, so don’t expect to download any movies if you’re on EE).

It seems EE has had it easy up until now, monopolising the market and having little threat to its 4G stranglehold. But with the competition hotting up, it may have to reconsider its prices. Vodafone has already released a statement saying that when it launches its 4G services, it will buy people out of their EE contracts, so we could see a clash between the two companies in the near future.

Would you change network for the speed benefits of 4G?

Recent research commissioned by Virgin Media Business and carried out by YouGov, found that the majority of consumers (90%) wouldn’t change their current mobile phone provider based on the speed benefits of 4G. The main reason given for this is the cost (61%), so it seems likely that the new 4G network providers may have to slash prices in order to attract customers.

We’ll know more about the situation once the auction is over and Ofcom has decided the fate of the companies involved in the bidding war. We’re expecting larger networks like Vodafone and O2 to be the hardest hitters, along with EE (who already have a big piece of the 4G pie). But only time will tell whether the networks can entice customers away from 3G, and who will eventually come out on top of the 4G pile.

This guest post was written by Abbi Cox of Phones 4u, who have a selection of mobiles at their lowest prices ever.


Main Image courtesy of sscreations / FreeDigitalPhotos.net

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