Mobile 4G Insight

The upcoming 4G auction will be the largest ever sale of spectrum in the UK< boosting the amount of airwaves available by 75% and playing a critical role in meeting the demands of one of Europe’s most data-hungry markets.  We can expect some intensive bidding over the next few weeks as the UK 4G auction process gets under way.

The recent spectrum auction in the Netherlands raised almost three times more than expected, which could be a worrying development for UK operators already under revenue pressure. While the results and winners will be confirmed in February or March, the presence of new players in the bidding process is likely to drive higher the amount raised for the government’s coffers.  However, we do know that it will remain far short of the £22.5 billion received from the 3G auction in 2000.

The participation of three new players (BT, PCCW and MLL) in the process could put pressure on 3, which was understood to have been earmarked by Ofcom as the likely ‘4th operator’ to gain a minimum spectrum holding below 1GHz. Should 3 fail to acquire frequencies at 800MHz, its long term prospects in the UK market would be severely dented.  Sky, TalkTalk and Virgin Media were all touted as potential bidders. However, the lack of greenfield 4G operators in most other European markets means that their absence in the process is unsurprising.

EE will have undoubtedly gained a head-start of at least 6 months by the time its rivals launch. However, its failure to focus on new services instead of just speed could allow the UK’s other operatros to rapidly close the gap.  EE’s entry tariff priced at £36 per month that offers a disappointing 500MB of data – enough for only a couple of hours streaming for example on the BBC iPlayer. It faces a delicate conversation at point of sale to upgrade customers who are currently paying the same amount for unlimited data with T-Mobile’s Full Monty plan.

*Taken from an article written by Kester Mann, Senior Analyst, Operators at CCS Insight.