UK 4G auction results announced, revenue lower than expected

The UK telecommunications regulatory body Ofcom has announced the results of the 4G auction raising a less than expected £2.34bn ($3.59bn) in revenue.

The overall figures may be seen as disappointing given the Office for Budget Responsibility (OBR) had predicted a £3.5bn ($5.37bn) windfall from the auction. The UK 3G auctions in 2000 raised £22bn in comparison.

Yet the results show that the main players seem to have gotten a share of the spectrum, dealed out in 2.6 GHz and 800 MHz bands. Vodafone ended up forking the most out - £790m for both bands – with Everything Everywhere (£588m), Telefonica (£550m), Hutchison 3G UK (£225m) and BT (£186m) also gaining a share.

Only Telefonica and Hutchison did not get a slice of the larger 2.6 GHz band, whilst MLL Telecom and HKT failed in their bids.

“This is a positive outcome for competition in the UK, which will lead to faster and more widespread mobile broadband, and substantial benefits for consumers and businesses across the country,” said Ofcom chief executive Ed Richards in a statement.

But what does this mean for operators? Victor Basta, MD of Magister Advisors, said that mobile operators were the equivalent of “digital drug mules” because of social networking.

Basta said: “The disappointing revenues from the 4G auction, well below government forecasts, are a reflection of the challenges that mobile operators face in growing revenues from their users in the social media age.

“Mobile operators increasingly find themselves in a role that is about supporting end users’ social networking habits, with little, if any, commercial benefit.”

This is the latest development in the UK’s LTE progression, with Everything Everywhere (EE) being given 4G in August months before any of its rivals.

The process for the remaining operators isn’t over yet, however; the location of each bidder’s spectrum still needs to be allocated in the ‘assignment stage’.

Ofcom has asserted its commitment to the future, with more mobile spectrum needed in the UK long term to avoid a possible ‘capacity crunch'.

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