Britain's mobile operators pick up new 4G licences on the cheap
Wednesday 20 February 2013
Britain’s mobile operators were celebrating today as they paid just £2.34 billion for new, super-fast 4G mobile spectrum — far below the £3.5 billion that the Treasury and many City analysts expected.
The big three players — Vodafone, O2 and EE, which includes T-Mobile and Orange — paid the most and got the lion’s share of the new airwaves in the auction, which was conducted amid tight security by regulator Ofcom.
But some analysts expressed surprise that both O2 and Three, the fourth-biggest operator, did not win quite as much spectrum as expected.
Instead, BT emerged as a niche player, picking up a small but significant amount of high-frequency airwaves, although it will be used to support corporate customers and not consumers.
The move could see BT try to muscle in on the lucrative business market. Vodafone dominates the corporate sector at present and paid the largest amount, £791 million, to protect its position.
The sell-off was never expected to raise as much as the £22.5 billion that the Treasury got in a previous auction of 3G airwaves in 2000, but today’s result will still be a major disappointment to Chancellor George Osborne.
He had pencilled in a £3.5 billion windfall in his Autumn Statement and some analysts had reckoned that it could have hit £5 billion.
Ofcom conducted more than 50 rounds of bidding to auction off the different parcels of air-time to the five winning operators. Two other small bidders got nothing. The 4G licences last for 20 years.
The regulator arranged the sales process in a deliberate way to ensure there were at least four viable operators and to avoid prices rocketing out of control — partly so consumers were not landed with much higher bills.
Analysts at investment bank Espirito Santo suggested that O2’s failure to land some high-frequency spectrum will mean the company has “less network capacity in urban areas relative to Vodafone in particular”, but users are unlikely to notice a difference.
O2 said its spectrum allocation will still “ensure the widest and deepest possible reach for new services”.
The new 4G services should be up and running within six months and will mean phone users will enjoy much higher speeds when they use the mobile internet on smartphones and tablets.
EE became the first carrier to launch a 4G service last autumn, using some of its existing spectrum, but analysts believe it has had only “modest” take-up so far.
Victor Basta, managing director of advisory firm Magister Advisors, claimed part of the reason mobile operators did not want to pay more is that they are struggling as revenue from voice calls and text messages falls.
“Mobile operators increasingly find themselves in a role that is about supporting end-users’ social-networking habits, with little, if any, commercial benefit,” he said.
“Social-networking has effectively turned mobile network operators into digital drug mules.”
- 1 Vladimir Putin says Russia will fight for the right of Palestinians to their own state
- 2 Ohio Democrat Teresa Fedor speaks out during abortion debate to reveal she has been raped – and is interrupted by laughter from Republicans
- 3 Germanwings plane crash: I have depression. That doesn't make me a psychopath
- 4 The West has it totally wrong on Lee Kuan Yew
- 5 The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat
Vladimir Putin says Russia will fight for the right of Palestinians to their own state
Ohio Democrat Teresa Fedor speaks out during abortion debate to reveal she has been raped – and is interrupted by laughter from Republicans
Germanwings plane crash: Investigators may have already found remains of suspected killer co-pilot Andreas Lubitz
Children take eight Isis captives to be beheaded in latest propaganda video
The battle for the Middle East's future begins in Yemen as Saudi Arabia jumps into the abyss
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
The West has it totally wrong on Lee Kuan Yew
iJobs Money & Business
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...