Ofcom finally announced the timetable for the roll out of 4G services in the UK today (24 July), with the 4G spectrum auction set to begin at the end of the year and bidders entering the ring by early 2013.
Announcing the plans, Ofcom opened the door for Three to stake a claim in the 4G rollout, confirming that it will reserve some 4G spectrum for a fourth operator other than O2, Vodafone and Everything Everywhere in the interests of competition.
The reservation of spectrum for a fourth national wholesaler also encourages bids from other contenders such as Virgin and BT.
Ofcom said allowing a fourth contender would result in 'better services at lower prices', adding the fourth entrant ‘could be either Hutchinson 3G or a new entrant altogether.’
The amount of spectrum contenders will be allowed to bid for will also be capped with an overall spectrum cap of 2x105 MHz and a sub 1-GHz spectrum cap of 2x27.5 MHz, as proposed in Ofcom's January consultation.
Ofcom said the caps were necessary to ensure competition by preventing prevent an imbalance in the amount of spectrum holding between networks.
The report also guarantees nationwide coverage. The spectrum bands will be auctioned to bidders as a series of lots. One of the 800MHz lots of spectrum will carry an obligation to provide a mobile broadband service for indoor reception to at least 98% of the UK population by the end of 2017 at the latest.
Ofcom believes this will push the other networks to compete by providing similar nationwide coverage.
The auction will offer the equivalent of three quarters of the mobile spectrum in use today – some 80% more than released in the 3G auction, which took place in 2000.
It will see at least two spectrum bands on offer – 800MHz and 2.6GHz. The lower frequency 800MHz band is part of the ‘digital dividend’, which is suited to widespread mobile coverage. The higher frequency 2.6GHz band is better suited to delivering the capacity needed to provide faster speeds. The two bands add up to 250MHz of additional mobile spectrum, compared to 333MHz in use today.
The combination of low and high frequency spectrum will allow 4G mobile broadband services to be made widely available across the UK and ensure capacity in high demand urban areas.
Ofcom chief executive Ed Richards said: 'The 4G auction has been designed to deliver the maximum possible benefit to consumers and citizens across the UK.
‘As a direct result of the measures Ofcom is introducing, consumers will be able to surf the web, stream videos and download email attachments on their mobile device from almost every home in the UK.’
Three, Vodafone and O2 said it would take time to go through the detail of the document, which runs to more than 1,000 pages across its various annexes.
A Three spokesperson said: 'Ofcom’s decision on the structure of the spectrum auction will have a lasting effect on the choice of services and value available to mobile consumers. We are working through the detail of this very substantial document to evaluate what it means for both consumers and competition in the UK mobile market.'
A Vodafone spokesperson said: 'Ofcom appears to have created a mechanism to deliver the spectrum needed to run competitive 4G services and we welcome the work it has done. We also support the regulator’s desire to see 4G services delivered to as many people as possible. However, we will obviously need to study today’s lengthy documents to make sure they deliver the fair and open auction that this country needs.'
An O2 spokesperson said: 'Ofcom’s detailed rules for the auction represent a significant step towards 4G launch in the UK. Whilst Ofcom has taken a number of our suggestions on board, they are combined with other changes to the previous proposals. We will need to study the package in detail before responding to the Notice on the Regulations, which puts the rules into law.'
Editors: Carol Millett and Graeme Neill