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Ofcom, the telecom regulator in the UK, has unveiled plans for the auction of 4G spectrum. The bidding will not begin until early 2013. It expects consumers to start getting services in late 2013 and hopes 98% of the UK will have 4G coverage by 2017.

The 4G auction will offer at least two spectrum bands – 800 MHz and 2.6 GHz. The 800 MHz band is part of the ‘digital dividend’, is still being used for analog television is some areas. The 2.6 GHz band lacks the penetration of 800 MHz but has more bandwidth for faster speeds. These two bands add up to 250 MHz of additional mobile spectrum, compared to 333 MHz in use today.

Currently, Everything Everywhere, a joint venture between Deutsche Telekom and France Télécom, O2, which is owned by Telefónica, and Vodafone, the British operator, are the big three mobile providers. Other operators, such as Virgin Mobile, are primarily a “virtual operator”, leasing their spectrum from others.

Each of the big three bidders will have a cap on how many chunks they can gobble as well as having one chunk off the table for a fourth operator. Ofcom required Everything, Everywhere, to divest itself of some of its 1.8 GHz spectrum as a condition of the merger approval. That spectrum may or may not be included in the auction (pending a direct sale).

Ofcom wants to see at least four wholesalers of 4G mobile services. “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 Hutchinson 3G or a new entrant altogether,” Ofcom said.

Telefónica and Vodafone said last month they planned to combine their wireless phone networks in Britain and jointly build a new, LTE network to keep pace with the market leader, Everything Everywhere, which is itself the product of a merger between T-Mobile UK and France Telecom (Orange).

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.

United Kingdom has a total of 80 million subscribers, with a 130.55% penetration rate. Mobile operators in the UK include:

The minimum sum of proposed reserve prices for the whole 4G auction is £1.4 billion – but it is expected to raise more. One British pound sterling = $1.55 US dollars, so £1.4 billion equals USD $2.17B and £22.5 billion equals USD $34.94 billion.

The FCC’s 700 MHz auction raised $19.6 billion for the U.S. Treasury with AT&T Wireless and Verizon Wireless accounting for the bulk ($16 billion), but with around four times the subscriber base of the UK auction.

The UK’s consultation on the proposals will be open until 11 September with bidders then asked to submit their requests to enter the auctions by the end of 2012, before the actual bidding begins 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. The 4G auction was originally supposed to happen two years ago, but it’s been delayed and delayed by the bickering between the operators

The last time an auction was held, for 3G in 2000, it raised a record £22.5bn for the Treasury, but practically broke the carriers.

Related Dailywireless articles include; Joint LTE Network in UK Planned by Vodafone and Telefónica, UK Spectrum Auction: Delayed Again?, UK Spectrum Auction: Legal Threat from 02UK?, UK Delays 4G Auction, Ofcom: White Spaces by 2013, UK Gets Free Public WiFi, Europe’s Digital Divide Auction, German 4G Auction: It’s Done, Auctions Winding Down in Germany & India, Germany 4G Auctions Begin, Europe to Follow, EU: Global LTE Roaming at 1.8 GHz, End Near for Indian WiMAX?, India’s Broadband Auction: It’s Done, TD-LTE Gains Momentum, Yota Dumps WiMAX, Australia: WiMAX to TD-LTE, UK Getting LTE, WiMAX to TD-LTE: Everybody’s Doin’ It

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