Ofcom announces mobile internet expansion
Ofcom has announced plans to increase the spectrum capacity available to mobile phone networks by up to 75%.
The regulator will auction off fourth-generation (4G) spectrum capacity released by the switchover from analogue to digital television by the end of the year. The move is expected to raise at least £3 billion for the treasury in the biggest sale of public assets under this parliament. Analogue TV signals are scheduled to be turned off at the end of October.
Network operators are facing a massive surge in demand for spectrum capacity as more consumers adopt data-hungry smartphones that use mobile internet services such as streaming video, email, messenger services, online mapping, and social networking. Three has said it could run out of network capacity as early as the summer.
A condition of one of the licences to be auctioned off is a commitment to ensure 4G broadband services reach at least 98% of the country by 2017. At present, around 5% of the country has no mobile phone coverage at all.
Announcing the planned sell-off, Ofcom chief executive, Ed Richards, said: “This is a crucial step in preparing for the most significant spectrum release in the UK for many years. The proposals published today will influence the provision of services to consumers for the next decade and beyond.
“The UK benefits from being one of the most competitive mobile phone markets in Europe. This means that consumers pay less for mobile communications services and have the choice to shop around for packages that suit them best. As the UK enters a new generation of mobile communications, Ofcom’s objective is to promote effective competition and to stimulate both investment and innovation.”
Each of the UK’s mobile networks will face limits on how much of the released spectrum it can bid on. Ofcom has attracted criticism by scrapping previous guarantees that Three and Everything Everywhere – the parent company of T-Mobile and Orange phone contracts – would be awarded a share of the valuable 800MHz band. There are concerns that this could result in the failure of Three, the smallest of the network providers, leading to higher costs for consumers as a result of less competition.
David Dyson, chief executive of Three UK, said: “Today’s proposals appear to be a pragmatic step towards bolstering the prospects of a competitive market for mobile data which would benefit all UK consumers.
“The decisions made by Ofcom as a result of this consultation will determine how much consumers can look forward to more choice and innovation in the mobile data revolution. We urge Ofcom and the government to maintain momentum now and to ensure the auction is delivered in 2012 as planned.”
A Vodafone spokesperson said: "We welcome Ofcom's revised proposals, which bring the UK closer to a fair and open auction that will benefit the wider economy, increase competition and ultimately lead to the creation of innovative and exciting new services for consumers.
"Ofcom has produced a lengthy document and we need to understand the regulator's rationale for protecting a fourth operator, but it has made significant steps towards bringing 4G services to this country."
Ofcom has entered into a 10 week consultation period in which stakeholders can submit comments on the proposals. A final auction design will be published in the summer with the sale itself following in the final three months of 2012.