Ofcom Denies 4G Auction Delays

Despite news stories claiming serious delays to the UK’s auction of radio spectrum for 4G services, it appears that the regulator Ofcom  is on schedule to release the new spectrum on time.

Ofcom published proposals for the auction of spectrum in the 800MHz and 2.6GHz regions in March, with plans to hold the auction itself in the first half of 2012. In the last few days, sites including the Guardian, Computing and Mobile Today, have reported that Ofcom will miss the deadline, on the basis that the final details of the auction will not come out until November when they had been expected this month.

Still on target, says Ofcom

The auction process is still on target, an Ofcom spokesperson told eWEEK Europe. If the details come out in November, the auction can still held in the first half of 2012 – and in any case services can’t start till 2013, because the spectrum needs to be cleared of existing users and potential sources of interference.

“Ofcom has been very explicit in its aim to begin the 4G auction as soon as is practicable and this remains our objective,” said the spokesperson. “However, this is a complex area, involving a large number of technical and competition issues that we need to consider and resolve before finalising proposals. For example, a very high proportion of households in the UK rely on Digital Terrestrial TV – Freeview – which needs to be relocated before 4G can be rolled out. This kind of complex problem needs to be properly addressed before we award the spectrum.”

The auction has been anxiously awaited for more than four years, and is intended to provide spectrum for operators to deliver advanced “4G” mobile services such as LTE (long term evolution). The auction process became tangled with moves to allow re-farming of 2G spectrum, opening it up to allow those who hold it to offer more modern mobile services.

Auction universally criticised

Ofcom’s auction plans were criticised by every UK operator, with incumbent O2 complaining that provisions to guarantee spectrum for newer players such as Everything Everywhere and Three represented “illegal state aid”. Everything Everywhere said the proposals did not guarantee it a fair amount, while Three described the plan as “a boot on its head” that could force it to close.

In the end criticism by both sides could be an indication that Ofcom got the balance right. The argument shifted to the fact that re-farming their existing spectrum gives low-frequency incumbents Vodafone and O2 a head start on offering 4G services. O2 and vodafone don’t have to wait for the auction to start delivering new services on spectrum below 1GHz, which has good penetration into buildings, and they are still paying a very low licence fee for their licences, which date back well before the 3G auction of the late 1990s.

However, although O2 has already launched 3G services on spectrum formerly reserved for 2G, the incumbents argue that it takes significant time and investment to do so – O2 has only upgraded small pockets, and Vodafone has not started. The price of the refarmed spectrum will eventually go up as licence fees will be adjusted to a market rate, when one has been set next year by the results of the auction.

Ofcom denied that there was any legal action delaying the auction, and pointed to the issues of switching over digital TV services which – in some areas – have been put into parts of the spectrum which were eventually given over to 4G services across Europe.

In the 2.6GHz band, Ofcom is sponsoring studies to make sure that services here will not interfere with aircraft radar systems which operate in nearby spectrum.

So, if the auction is on track, where did the story come from? It seems likely to have been some pre-emptive lobbying by the smallest mobile operator. In the Financial Times, Three’s CEO David Dyson warned that there was a “significant risk” that the auction might be delayed by legal action – especially if O2 decides to take Ofcom to court over its claims of illegality.