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Ofcom raises £2.34bn in 4G auction, less than forecast

Published: February 20, 2013 | 8:54 am
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Telecoms regulator Ofcom has raised £2.34bn from its auction of 4G mobile spectrum, less than expected.

The Office for Budget Responsibility (OBR) had forecast that the auction would raise £3.5bn for the Treasury.

The winning bidders are Everything Everywhere; Hutchison 3G UK; Niche Spectrum Ventures, a BT subsidiary; Telefonica (O2); and Vodafone.

4G mobile broadband should provide smartphone and tablet computer users with superfast download speeds.

The auction netted far less than the £22bn raised from the 3G auction in 2000.

Ed Richards, Ofcom chief executive, told the BBC that the figure was lower because “we are in very, very different times”, but he insisted that maximising the size of the auction was not the objective it was set by the government.

“What we were trying to do was ensure that a valuable economic resource was brought into productive commercial use,” he said.

Responding to the announcement, a Treasury spokesperson said: “The £3.5bn number at Autumn Statement 2012 was certified by the independent OBR and based on external expert independent analysis based on similar auctions, including the last 3G one.

“The final auction revenue will be accounted for at Budget in the usual way.”

But Chris Leslie, the shadow chief secretary to the Treasury, said: “It’s extremely worrying that the Chancellor’s entire budgetary strategy seems to be based on numbers that were significantly over-estimated.”

Even senior Tories took the opportunity to criticise Chancellor George Osborne’s figures.

John Redwood, MP, said: “The figure for the 4G auction was optimistic, just like most of the numbers in George Osborne’s strategy. This is a dent, but there are far bigger dents in the public finances.”

Radio frequencies
Ofcom says 4G will provide £20bn of benefits for UK consumers over the next 10 years.

The regulator auctioned the spectrum in two bands, 800MHz and 2.6GHz, equivalent to two-thirds of the radio frequencies currently used by tablet computers, smartphones and laptops.

This “will allow 4G networks to achieve widespread coverage as well as offering capacity to cope with significant demand in urban centres”, said Mr Richards.

“4G coverage will extend far beyond that of existing 3G services, covering 98% of the UK population indoors – and even more when outdoors – which is good news for parts of the country currently underserved by mobile broadband”, he said.

Vodafone bid £791m, the most of all the bidders, for fives chunks of spectrum.

Mobile operator EE, the T-Mobile and Orange joint venture, was the first to launch a 4G service in late 2012, but has struggled to attract users, leading it to cut its prices in January.

bbc.co.uk

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