Qualcomm wins licence in latest auction of radio spectrum

Qualcomm, the US wireless research group, is paying £8.5m to license a band of UK radio spectrum in the first of three major auctions that are expected to raise billions of pounds and pave the way for a range of next-generation mobile services.

Pressure on radio frequency is increasing as technological convergence creates growing consumer demand for services on the move. The Qualcomm licence is for a band particularly well-suited to wireless broadband and mobile television.

"We are not going to become a service provider ourselves, but we are looking for our partners to exploit the technologies we have to launch innovative services," Andrew Gilbert, a vice-president at Qualcomm Europe, said.

The Qualcomm auction is the latest in Ofcom's ongoing programme to improve the efficiency of the UK's spectrum allocation and ensure maximum commercial exploitation. The next competition, to run later this year, is even more significant. It has a price tag that could run into the tens of millions because it is for a frequency that supports WiMax, a high-speed network technology similar to a common WiFi home wireless system, but with a more robust signal and a range of a kilometre or more.

Although WiMax is not new it has had little success so far. But interest is hotting up. In the US last week, Sprint Nextel announced a $14.5bn (£7.4bn) joint venture with Clearwire to build a network servicing as many as 140 million people by the end of 2010. And Google is pumping another $500m into the scheme.

At the moment, the UK market is small. Freedom4 and UK Broadband, a subsidiary of PCCW, are the only providers with a national licence, and only limited services are available. But developments on the other side of the Atlantic are fuelling interest, and some big players are lining up for the relevant spectrum auction. Ian Livingston, who takes over aschief executive at BT in two weeks' time, has said thecompany is interested, and Vodafone has trials running in Malta.

Freedom4 is also already in talks with potential investors about the £100m infrastructure funding it estimates it will need from 2009-11. "We are talkingto our partners and the banks," Mike Read, chief executive of Freedom4, said. "Following the deals in the US, there is moreinterest in what we are doing over here."

Ian Keene, a senior analyst at Gartner, said: "There is abusiness case for WiMax in the UK, but most likely it will becity-centric and focused on business, rather than nationalcoverage competing with mobile networks."

The biggest auction of all will be next year's bidding for the "digital dividend" – the wide bands of frequency freed up when the analogue television signal is switched off in 2012. The debate about who should get what is already well under way. Broadcasters claim a substantial portion for high-definition TV, mobile operators want it for next-generation cellular services such as video, and internet service providers say it iscrucial for the broadbandinfrastructure.