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BT entering a Niche to get a hearty slice of the 4G pie

27 · FEB ·2013

At the end of a complex bidding process, the 4G auction has its victors and has raised £2.34bn for the public purse. About 90% less than the price paid at the 3G sale 13 years ago - at the height of the dot-com bubble. It's also more than £1bn short of what the chancellor estimated in his autumn statement.

The relatively modest amounts raised by the auction may well be attributable to the limited success enjoyed by EE since launching the 4G service. Results published last week for EE’s financial end of year show contract net additions actually falling by over a third in 2012 Q4. It’s been suggested that this may be down to the way EE have been pricing their data bundles; offering only the same amount of data as on 3G platforms (resulting in customers running out of data early within the contracted month). The recent reduction in the price of EE’s most basic tariff (by £5 a month) may well be a move to remedy these perceived short comings.

There were no real surprises as to the companies who have succeeded in the auction with 3, EE, Vodafone and the new kid on the block Niche (well BT) all getting portions of the valuable spectrum.

It is interesting that BT, who left the mobile sector a decade ago when it sold off BT Cellnet (now O2), is now back in the market with a healthy chunk of the 2.6Mhz spectrum which is best suited to handling high data traffic in cities.

BT has stressed that it is not planning to operate a national mobile network, but it will be using its spectrum to boost its fixed and Wi-Fi networks for businesses and consumers.

Even if the Treasury is disappointed, the auction may be good news for the roll out. We can now expect plenty of competition to offer fast new mobile services across the UK. But those people in 3G "notspots" will be hoping that this time they will not be left out of the faster future. Ofcom CEO Ed Richards has said “we will be conducting research at the end of this year to show who is deploying services, in which areas and at what speeds. This will help consumers and businesses to choose their most suitable provider.”

Ofcom has attached a coverage obligation to one of the 800 MHz lots of spectrum. The winner of this lot is Telefónica who is obliged to provide a mobile broadband service for indoor reception to at least 98% of the UK population (expected to cover at least 99% when outdoors) and at least 95% of the population of the UK by the end of 2017. While the main part of the auction has concluded, there is a final stage in the process to determine where in the 800 MHz and 2.6 GHz bands each winning bidder’s new spectrum will be located. Bidding in this final stage, called the ‘assignment stage’, will take place shortly.

Following that stage, once bidders have paid their full licence fees, Ofcom will grant licences to the winners to use the spectrum. Operators will then be able to start roll out services.

By 2030, demand for mobile data could be 80 times higher than today. To help meet this demand and avert a possible ‘capacity crunch’, more mobile spectrum is needed over the long term, together with new technologies to make mobile broadband more efficient. Ofcom is planning now to support the release of further spectrum for possible future ‘5G’ mobile services.

As for Fluidata we expect to be able to launch our own 4G services in the not too distant future, if you would like further details please speak with your Account Manager.

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Posted by Sanita Karra