UK’s telecoms regulator, Ofcom has announced the proposed details for its upcoming radio spectrum auction which is expected to pave the way for 4G services in the country. It has stated that the spectrum auction is the largest ever single auction of additional spectrum for mobile services in the UK, equivalent to three quarters of the mobile spectrum in use today and 80% more than the 3G auction which took place in 2000.

It is believed that the auction will take place in the first quarter of 2012. The auction will be for two spectrum bands – 800 MHz and 2.6 GHz, and adds up to 250 MHz of additional mobile spectrum.

The auction structure will also be biased to ensure that the market retains at least four mobile networks (5 if you split the merged Orange/T-Mobile).

According to Ofcom, the least restrictive way to ensure at least four national competitors is through the use of spectrum floors in the auction. This involves disregarding any auction outcomes in which four companies do not win the minimum amount of spectrum necessary to provide higher quality data services. This can involve different combinations of spectrum, each of which could be sufficient to ensure a credible competitor.

Ofcom has proposed that this minimum amount should be one of the following five combinations:

• 2×5 MHz of sub 1 GHz spectrum and 2×20 MHz or more of 2.6 GHz; or
• 2×5 MHz of sub 1 GHz spectrum and 2×15 MHz or more of 1800 MHz; or
• 2×10 MHz of sub 1 GHz spectrum and 2×15 MHz or more of 2.6 GHz; or
• 2×10 MHz of sub 1 GHz spectrum plus 2×10 MHz or more of 1800 MHz; or
• 2×15 MHz or more of sub 1 GHz spectrum.

The watchdog also proposes to put in place safeguard caps to guard against longer term risks to competition from any one licensee holding a disproportionate amount of spectrum.

There will be a sub 1GHz safeguard cap of 2×27.5 MHz, which will mean that no one competitor can obtain more than this amount of sub 1 GHz spectrum, and there will also be an overall spectrum holdings cap of 2×105 MHz, which will mean that no one competitor can obtain more than this amount of spectrum overall.

Securing wide availability of next generation mobile broadband.

Ofcom also proposes to include a coverage obligation in just one of the 800 MHz licenses. The obligation would require the licensee to provide a mobile broadband service covering 95% of the UK population. It is expected that bidders will factor in the cost of achieving this obligation when making bids for the licence. This should result in coverage for future mobile broadband services that approaches today’s 2G coverage. The date for meeting these obligations would be the end of 2017.

A consultation is being carried out to iron out the final details, such as which of the five above spectrum limits should be adopted before the auction takes place next year.