Britain prepares for fresh wireless spectrum auctions
LONDON, Dec 19 (Reuters) - Britain is poised to raise the curtain on a new series of wireless spectrum auctions, although few expect anything like the bidding frenzy that cost mobile phone companies over 22 billion pounds ($44 billion) in 2000.
British telecoms and media regulator Ofcom on Wednesday called for interested bidders to put in their applications to buy spectrum in the 2010-2025 Megahertz and 2500-2690 MHz bands -- formerly called the "3G extension band" -- by January 16.
Mobile phone operators, who were forced to concede they had vastly overpaid seven years ago as their shares plunged, triggering colossal asset writedowns and record losses, declined to be drawn on which auctions they were most interested in.
But the world has changed since Britain pioneered auctions of speedy, third-generation (3G) mobile licences across Europe that raised more than 100 billion euros ($144 billion) and helped fuel a precipitous drop in telecoms shares.
Unlike seven years ago, there are no regulatory restrictions on trading the spectrum or on which services can be run over what will be the UK's largest ever release of spectrum, which is due to be auctioned off between June and August next year.
The sale is part of Ofcom's plans to reallocate more than 400 MHz of prime spectrum -- which analysts say could radically alter both the diversity of telecoms platforms in Britain and the array of customer services over the next few decades.
Broker Nomura says the most significant chunk of spectrum to become available, however, will be that arising from the so-called Digital Dividend Review (DDR) in 2009 -- although the bulk of that will only be available when analogue television transmissions cease in 2012.
The DDR spectrum is in the 550-630 MHz and the 806-854 MHz band, which is ideal for services such as wireless broadband, mobile television, fixed television or local TV stations.
"The amount of spectrum available for allocation over the next couple of years is enormous within the context of spectrum bands, which offer the chance to develop services which have high value, thanks to the functionality attached to them," said Nomura analyst Martin Mabbutt in a research note.
"This should permit the creation and operation of networks capable of dealing with the mobile bandwidth explosion, which we believe the market is on the verge of embracing."
Nevertheless, the DDR sales are some way off. So, as part of its overhaul of scarce spectrum, Ofcom is keen to ensure that all companies have equal access to the frequency band that is considered the "best" for mobile phone use -- the 900 MHz band.
Only market leader Vodafone Group Plc (VOD.L) and O2 UK, owned by Spain's Telefonica (TEF.MC), currently have access to this band for historical reasons and Ofcom raised hackles by suggesting in September that it take a chunk of that spectrum and auction it to their rivals.
This proposed auction, which could yet face a legal challenge by the operators, could also be held in 2009 with the winners potentially able to use it from 2010.
With cell phone groups upgrading 3G networks to allow better quality and faster video, pictures and Internet access, Wireless Intelligence, a research group run by the GSM Association trade body, estimates the number of 3G users in Britain will surge by more than 240 percent to 57.5 million from 16.8 million by 2011. (editing by Elaine Hardcastle)
