Ofcom has finalised the rules of the upcoming mobile data spectrum auction, which will pave the way for the introduction of 4G LTE services from rival operators to EE, the only network to currently offer a 4G service.
The telecoms regulator published the final regulations and timetable for the spectrum in the 800MHz and 2.6GHz bands on Monday, marking the final preparations for the auction.
"Today marks an important shift from preparation to the delivery of the auction, which will see widespread 4G mobile services from a range of providers," Ed Richards, chief executive of Ofcom, said in a statement.
"The entire industry is now focused on the auction itself, with a shared goal of delivering new and improved mobile services," he added.
The auction will give O2, Three, Vodafone and other operators the chance to bid on paired blocks of spectrum in the 800MHz and 2.6GHz frequencies, ultimately allowing them to roll out their own 4G network services.
The provisional date for operators to submit their applications to bid (and place an initial deposit) is set for 11 December. Following this, Ofcom will review the applications and determine which companies can go on to take part in the auction.
Actual bidding will begin in January, with a view to the process being wrapped up and new 4G services going live in May or June 2013.
The 4G scene
EE, formerly known as Everything Everywhere, is the only network in the UK right now able to offer large-scale 4G services to customers. The company, which runs the Orange and T-Mobile networks, got permission from Ofcom in August to 'refarm' the 1800MHz spectrum it used for 2G for LTE ahead of the spectrum auction.
Rival operators were understandably concerned that this permission would create an unfair advantage for EE. The regulator was forced to revisit the auction rules again, to try to bring its timetable forward, and it managed to do so by renegotiating the date that the 800MHz band would be cleared of TV signals for 4G usage.
Ofcom said that the reserve price for the auction has been set at just under £1.4bn (the minimum amount that the sale of the spectrum will raise for the Exchequer). However, Simon Harris, director of PWC's valuations team, expects it to rake in up to £4bn.
"We expect demand for this prime real estate of the airwaves to drive prices up to £2bn to £4bn. The desire for sub-1GHz spectrum is likely to be a key driver of competitive tension," Harris said in a statement.
Spectrum in the 800MHz band (or any band below 1GHz) is considered to be of 'premium' quality for 4G service, as it provides better indoor coverage and performs better over long distances. Given this, all operators are keen to get their hands on radio waves in this band.
However, any operator that successfully bids for the two 10MHz blocks of 800MHz spectrum will be obliged to provide 4G coverage that reaches at least 98 percent of the British population.
In addition, it must reach 95 percent of people in the UK's nations - England, Wales, Scotland and Northern Ireland. This condition has been included by Ofcom to stop operators rolling out 4G services only to the most densely populated areas.
Long time coming
EE used to have a block of 800MHz spectrum reserved for it in the auction, but lost this when Ofcom gave it permission to refarm its 1800MHz holdings. As part of that approval deal, EE was made to offload two blocks of its 1800MHz spectrum to a smaller rival. Three bought the spectrum, but cannot use it for 4G services until at least September 2013, when EE must vacate the bands.
Both EE and Three are expected to be participating in the spectrum auction when it takes place. None of the UK operators were available to comment on Ofcom's move.
The 2.6 GHz and 800 MHz spectrum auction has been on the table since 2008, but has suffered repeated setbacks. A key issue has been threats of litigation from operators, which have protested over what they saw as the uneven distribution of different spectrum frequencies.
Earlier in the year, Ofcom revamped the auction rules to level the playing field a little and clear the auction deadlock.