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UK Operators Pick up 4G Licenses at Lower than Expected Prices

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The UK's 4G auction has completed, and the regulator, Ofcom has announced that it sold the licenses for a total of £2.34 billion (USD3.6 billion) significantly lower than the expected £3.5 billion that the government had expected.

All four incumbent networks secured additional spectrum, while Niche Spectrum Ventures (a subsidiary of BT Group) was the new entrant. A total of 250 MHz of spectrum was auctioned in two separate bands - 800 MHz and 2.6 GHz.

Ed Richards, Ofcom Chief Executive, said: "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.

Ofcom has attached a coverage obligation to one of the 800 MHz lots of spectrum.

The winner of this lot is Telefónica O2. This operator is obliged to provide a mobile broadband service for indoor reception to at least 98% of the UK population (expected to cover at least 99% when outdoors) and at least 95% of the population of each of the UK nations by the end of 2017 at the latest.

A breakdown of what was won, who won it and the base prices payable is detailed below:

Winning bidder Spectrum won Base price
Everything Everywhere 2 x 5 MHz of 800 MHz and
2 x 35 MHz of 2.6 GHz
Hutchison 3G UK 2 x 5 MHz of 800 MHz £225,000,000
Niche Spectrum Ventures 2 x 15 MHz of 2.6 GHz and
1 x 20 MHz of 2.6 GHz (unpaired)
Telefónica UK 2 x 10 MHz of 800 MHz
(coverage obligation lot)
Vodafone 2 x 10 MHz of 800 MHz,
2 x 20 MHz of 2.6 GHz and
1 x 25 MHz of 2.6 GHz (unpaired)
Total   £2,341,113,000

While the main part of the auction has concluded, there is a final stage in the process to determine where in the 800 MHz and 2.6 GHz bands each winning bidder's new spectrum will be located. Bidding in this final stage -- called the 'assignment stage' -- will take place shortly.

The networks are expected to launch LTE services this summer using the new spectrum, although Everything Everywhere (EE) has already launched LTE using its existing 1800Mhz spectrum.

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Tags: ofcom  lte  4g license  UK