Britain's mobile operators pick up new 4G licences on the cheap

 

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.”

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Mortgage Administrator

£20000 - £25000 per annum: Recruitment Genius: We are a vibrant and establishe...

Recruitment Genius: Payments Advisor

£15000 - £20000 per annum: Recruitment Genius: An experienced Repayments Advis...

Recruitment Genius: Investment Analyst

£25000 - £30000 per annum: Recruitment Genius: This leading provider of financ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Are you looking to take your ...

Day In a Page

A groundbreaking study of 'Britain's Atlantis' long buried at the bottom of the North Sea could revolutionise how we see our prehistoric past

Britain's Atlantis

Scientific study beneath North Sea could revolutionise how we see the past
The Queen has 'done and said nothing that anybody will remember,' says Starkey

The Queen has 'done and said nothing that anybody will remember'

David Starkey's assessment
Oliver Sacks said his life has been 'an enormous privilege and adventure'

'An enormous privilege and adventure'

Oliver Sacks writing about his life
'Gibraltar is British, and it is going to stay British forever'

'Gibraltar is British, and it is going to stay British forever'

The Rock's Chief Minister hits back at Spanish government's 'lies'
Britain is still addicted to 'dirty coal'

Britain still addicted to 'dirty' coal

Biggest energy suppliers are more dependent on fossil fuel than a decade ago
Orthorexia nervosa: How becoming obsessed with healthy eating can lead to malnutrition

Orthorexia nervosa

How becoming obsessed with healthy eating can lead to malnutrition
Lady Chatterley is not obscene, says TV director

Lady Chatterley’s Lover

Director Jed Mercurio on why DH Lawrence's novel 'is not an obscene story'
Farmers in tropical forests are training ants to kill off bigger pests

Set a pest to catch a pest

Farmers in tropical forests are training ants to kill off bigger pests
Mexico: A culture that celebrates darkness as an essential part of life

The dark side of Mexico

A culture that celebrates darkness as an essential part of life
Being sexually assaulted was not your fault, Chrissie Hynde. Don't tell other victims it was theirs

Being sexually assaulted was not your fault, Chrissie Hynde

Please don't tell other victims it was theirs
A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935