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Friday, 21 September 2007 |
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UK regulator Ofcom looks set for an auction in 2009 of 900MHz spectrum for 3G use.
Spectrum auctions are still a contentious topic in the mobile world, notably in the UK where the 2000 sale of 3G licences arguably hastened the ‘booming’ tech sector towards ‘busting’ point.
Proposals made yesterday would see chunks of 900MHz spectrum, currently held (but arguably underused) for 2G by Vodafone and O2, returned to the state for sale by auction to support new broadband wireless services. Ofcom concedes that most of the spectrum will be retained by the incumbent pair, who for the first time would be able to use 900MHz for 3G applications; the remainder would be sold to the highest bidders and would be tradable thereafter.
The prospect of an auction is interesting in a number of ways. It would be a bellwether or market health (or ‘over-exuberance’ as our old pal Alan Greenspan memorably put it). Even this far out, it also likely to see a battle between established cellular players, newer wireless operators and even the more ambitious private equity players.
According to Ed Richards, Ofcom chief executive, “we can’t see it, touch it or hear it, but radio spectrum is central to our lives and we are using mobile devices more than ever before. Our proposals are designed to make more spectrum available for high-speed mobile broadband services across the whole of the UK and to ensure that the UK mobile market continues to be one of the most competitive and innovative in the world.”
Importantly, frequencies in the 900MHz band permit the construction of wireless networks with far fewer base stations than at the higher frequencies. Ofcom estimates that a 900MHz broadband wireless network covering 99% of the UK’s population could be built with 10,000 fewer base stations than an equivalent network in the 1800MHz and 2100MHz bands.
Already there is talk of the spectrum auction raising UK£6bn (US$12bn) or more. This compares to the UK£22.5bn raised in the 2000 auction of five 2100MHz 3G licences. Here we go again?
Jim Chalmers
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