Telecoms regulator Ofcom has raised £2.34bn from its auction of 4G mobile spectrum, less than expected.
The Office for Budget Responsibility 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, and Vodafone and 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.
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.
BT says they paid far less, £186 million, for their winning bid however the final price to be paid may include an additional amount which will be determined during the assignment stage of the auction which now follows. There are no further licence fees for at least twenty years.
Ian Livingston, BT chief executive, said: “We are pleased to have secured this spectrum. We have said that we do not intend to build a national mobile network. Instead, this spectrum will complement our existing strategy of delivering a range of services using fixed and wireless broadband. We want our customers to enjoy the best possible connections wherever they are and this spectrum, together with our investment in fibre broadband, will help us achieve that.”
Meanwhile Vodafone has announced details of their winning bid saying it has acquired spectrum of 2 x 10MHz in the 800MHz band and 2 x 20MHz in the 2.6GHz band plus an additional 25 MHz of unpaired spectrum in the 2.6 GHz band.
They add that the spectrum award will support Vodafone UK’s plans to develop the next generation of mobile internet services, known as 4G, using Long Term Evolution (LTE) technology.
Vodafone UK chief executive Guy Laurence said: “We’ve secured the low frequency mobile phone spectrum that will support the launch of our ultra-fast 4G service later this year. It will enable us to deliver services where people really want it, especially indoors. This is great news for our customers. The next generation of mobile internet services will bring real benefits to both consumers and businesses.”