12/11/2012

Ofcom announces date for 800MHz and 2.6GHz auctions

Ofcom, the super regulator has announced that the auction for the 800MHz and 2.6GHz bands will commence on December 11th 2012.

The new regulations (pdf) covering the auction (know as a Standard Instrument) has been published and will come into force on November 23rd 2012.

Ofcom is proposing to auction the following lots: -

Lot CategoryA(i)A(ii)BCD(i)D(ii)E
800 MHz 2x5 MHz800 MHz 2x10 MHz (with coverage obligation)1800 MHz 2x15 MHz (Divestment)2.6 GHz 2x5 MHz (standard power)2.6 GHz 2x10 MHz (shared low power)2.6 GHz 2x20 MHz (shared low power)2.6 GHz 5 MHz (unpaired)
Ofcom’s proposal£225m£250m£225m£15m£3m per bidder, £30m threshold£6m per bidder, £60m threshold £0.1m

Lots A(i), A(ii) and C are suitable for generic mobile network operator LTE services, lot B is now irrelevant as EE have divested this spectrum to 3UK.

The low power bands D(i) and D(ii) are more suited to companies that have infrastructure and can offer femto cell type services (probably on a wholesale service to the main operators - for network offload), though new entrants could come in and offer innovative localised LTE services.

Lot E is probably suited to an operator who wants to offer broadband services (not using LTE which requires paired spectrum).

This means the minimum bid (if there only 1 bidder each for the low power license) is £499.1m, and if there are 10 low power bidders £580.1m. Obviously these are Ofcom's minimum bid values and the actual values could increase substantially.

Ofcom have also valued the 800Mhz significantly more than the 2.6GHz spectrum (as it has better propagation characteristics and therefore it's easier to cover large areas of population).

Ofcom agreed to move forward the auction after O2 and Vodafone threatened to take Ofcom to judicial review after allowing EE to offer LTE services on their 1800MHz spectrum, however O2 and Vodafone have no guarantees that they will win a license in either 800MHz or 2.6Ghz (though Ofcom can assess bidders not to be suitable to bid - but based on their stability etc).

Let the fun begin.

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