4G: Ofcom's priority remains having a four player market post auction, writes Matthew Howett, Practice Leader, Regulation and Policy, Ovum.
Ofcom remains of the view that a market with four players will bring the most benefit to customers and so continues to effectively reserve spectrum for Thee (or a new entrant which we consider unlikely). In its first set of proposals, similar protection was also given to Everything Everywhere but was dropped by Ofcom in its second consultation. Many believed that permitting EE to launch 4G early in its existing spectrum holding at 1800MHz was the consolation prize, however this has faced its own set of problems and isn't' dealt with in this consolation - but remains something which everyone is eagerly awaiting to learn the outcome of.
We have also seen an increased overage obligation for one of the 800MHz licence holders which is set to bring at least 2Mbps mobile broadband to virtually all of the UK population by the end of 2017. By focusing on indoor coverage it has the added benefit of improving outdoor coverage. However consumers in some parts of the country may for a time only have the choice of the one provider, since no access obligation has been imposed on the winner of this licence.
Despite 80% more spectrum being available in this auction than during the 3G licencing of 2000 which famously raised £22.5bn, this time it's likely to generate a mere fraction of that amount given both the use of spectrum caps (which limit how much each spectrum one operator can obtain), and a realisation from the industry that revenues aren't there to support such large outlays. However given the insatiable appetite for data from consumers in the UK, we can be quite certain that it will be a hotly contested auction with all players keen to ensure they get adequate spectrum to support further growth in demand.
Bidding is set to start early 2013 (although no date has been set) - a slight delay to the original timetable but hardly surprising, although networks are expected to be up and running by the end of 2013 which is more or less as originally intended. The timetable has always been highly ambitious and has attempted to achieve in a matter of months what took years for 3G. Things could of course still be delayed further if any operator launches a legal challenge - which can now be prepared as we approach the auction. In taking its time to get to this stage Ofcom will be fairly confident they have dotted all the i's and crossed all the t's so that in the event of any challenge they will come out on top and be able to get the auction back on track.