Mobile operators will be competing for their slices of the 800Mhz and 2.6Ghz high-speed data spectrum just before the Olympic Games begin in 2012. Ofcom’s chief executive Ed Richards has announced that the auction will take place in Q1 2012 and will “fuel an explosion” of 4G networks.
In a speech at the FT World Telecoms Conference yesterday, Richards announced a timetable that should see Long Term Evolution (LTE) networks up and running at the beginning of 2013.
“We aim to publish a consultation on our assessment of likely future mobile competition and detailed proposals for the combined auction, including details of any measures we propose to take to ensure effective competition, by the end of February [2011],” he said. “That consultation will end in May. A statement on future competition and details of the combined auction, together with draft auction regulations, in early autumn of 2011.”
The final auction regulations will be published by the end of 2011, when bidders will be invited to apply, with bidding starting in Q1 2012. The licences will be issued in the quarter following but bandwidth will not be available until early 2013, he explained.
There are two important caveats. Richards warned that any litigation against the government or Ofcom will jeopardise the timetable. Secondly, he said that the timetable was an ambitious one, compressing three-year’s work into two years which leaves no room to accommodate unforeseen delays and problems that may arise.
The auction was originally scheduled for 2008 but a legal challenge by T-Mobile and O2 demanding clarification of any refarming of the current 2G bandwidth for 3G use has delayed the process, hence Richards’ warning.
The implementation of high-speed 4G networks has already started in many other countries and the four-year delay could put Britain’s businesses at a disadvantage.
“It is clear that we are talking about a very significant step forward – not only the most significant release since the 3G auction in 2001 but spectrum which is the raw material that will fuel an explosion in next generation mobile broadband,” he said.
Analysts have predicted that the auction will reap the government billions of pounds at a time when a cash injection to the economy is sorely needed. However, this will still not measure up to the £22.5bn paid for 3G licences in 2000. A similar auction in Germany only raised £3.7bn.
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Stephen Rayment, CTO of BelAir Networks, said:
“Ofcom’s plans to auction the new spectrum is great news but this will not be the panacea for addressing the problems of data capacity faced by mobile operators. The £22 billion raised from auctioning of the 3G licences was largely a speculative move as operators weren’t completely sure how the spectrum would be used. It took nearly seven years and the launch of devices like the iPhone before demand for mobile data really started to take shape. Now, the vast surges in data consumption are wreaking havoc across 3G networks, particularly in areas of high user concentration. In fact, mobile data traffic is already on track to exceed the capacity that will be available in forthcoming LTE and 4G networks. Consequently, buying new spectrum is no longer a speculative move for mobile operators it’s an absolute necessity.
The real elephant in the room is how operators ensure their networks can continue to cope with the increasing appetite for mobile data. Whilst the upgrade path from 2G to 3G consisted primarily of swapping base stations from their tower and rooftop mounting locations, this macro-cellular approach will barely touch the sides when it comes to data capacity. Operators know that smaller cells are the only sure fire way of deploying future networks capable of delivering high quality mobile broadband. The problem then is finding ways to mount, power and backhaul the additional base stations required for small cell architectures.”