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UK 4G wireless spectrum auction critical in determining winners

January 28, 2013 | Jean-Pierre Joosting | 222903622
UK 4G wireless spectrum auction critical in determining winners The auction of coveted 4G spectrum that is now underway in the United Kingdom represents a critical juncture for country’s wireless market, with the winners set to gain access to data bandwidth essential for meet burgeoning demand for mobile data services.
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Chiefly driven by smartphones, U.K. mobile data traffic will rise by more than 400 percent from 2012 to 2016, according to a report from the IHS Screen Digest Mobile Technology Intelligence Service. IHS forecasts mobile data traffic in the country will rise to 1.4 billion gigabytes in 2016, up from 274 million gigabytes in 2012, as presented in the figure attached.

The auction features 2.6 GHz spectrum best suited for urban deployments and scarce spectrum at the 800 MHz band, which is especially suitable for delivering wireless services in rural areas. This makes 800 MHz desirable for any nationwide deployment of 4G.

The importance of this spectrum auction in shaping the future of the U.K. wireless market cannot be understated, said Daniel Gleeson, mobile analyst at IHS. Access to spectrum is the main barrier to entry for any company looking to build a new wireless network. The amount a company spends in the auction will affect their business performance for years to come. Seven companies are bidding for spectrum: the countrys four existing mobile operators along with three new players. With only three companies likely to win spectrum, at least one of the United Kingdoms existing operators is likely to lose out.

The four existing players that have entered the auction are EE, O2, Vodafone and Three. The three new entrants are BT, PCCW and MLL Telecom.

Other European spectrum auctions have only seen a maximum of three operators win 800 MHz spectrum. The United Kingdom could follow this pattern, yielding three winners and four losers.

The winners will have the bandwidth required to keep pace with the boom in mobile datawhile the losers will struggle to remain competitive in the mobile market, Gleeson noted.

Much like other developed markets, the United Kingdom has seen massive growth in smartphone users during the past five years. This, combined with a steady take-up of large screen mobile broadband services, is causing a substantial increase in data traffic carried by the mobile operators.
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