UK 4G auction falls below expectations

20 February 2013 | Kavit Majithia

The UK airwave auction has fallen well below early estimates after only raising £2.3 billion with five bidders successfully acquiring spectrum.

Analysts had anticipated as much as £3.5 billion would be raised from the auction, and this sum had already reportedly been factored into government accounts for this year.

The auction was fiercely contested, despite only raising a 10th of the £22.5 billion raised during the 3G auction in 2000.

As the auction finally draws towards a close, the UK will finally see the universal launch of 4G services. EE had been operating 4G since late last year after it was allowed to reuse its existing spectrum.

Vodafone has spent the largest sum, at £791 million, with EE footing a bill of £589 million. O2, which has an obligation to cover 99% of the population will spend £550 million and 3 will pay £225 million.

BT, surprisingly, has spent £186 million on frequencies addressing the higher end, and will look to boost mobile broadband services and improve its Wifi offering. Its investment signals the company’s move back into mobile services.

There have been long delays for the UK 4G auction after it was originally scheduled for 2008.

Operators have been divided and regulatory issues meant the auction has been put off, putting the UK significantly behind the US, Asia and other parts of Europe.

The UK government sees 4G as a likely catalyst for economic and technological improvement in the country, and a recent report by Ofcom indicated UK customers are likely to benefit from the technology by £20 billion over the next ten years.

""This is a positive outcome for competition in the UK, which will lead to faster and more widespread mobile broadband, and substantial benefits for consumers and businesses across the country. We are confident that the UK will be among the most competitive markets in the world for 4G services," said Ed Richards, chief executive of Ofcom.

Topics: UK, 4G, LTE, auction, spectrum, airwave, EE, Vodafone, O2