“This is high profile news. Industry players will recall the 3G auctions which took place in 2000, and which raised over £20BN for the treasury. This time around, the sums raised will be much lower (estimates are in the 2-4BN range), but the issues raised by the auction are vital for the industry and the economy.
“Most industry experts would say that the 3G spectrum fees paid in 2000 held back investment in 3G infrastructure rollout. When it eventually took place, the resulting coverage was (and to a degree) remains patchy. The new spectrum will trigger the rollout of new 4G radio access networks by the successful players, starting in 2013. However the ability of the mobile operators to fund the comprehensive build the Government say they are looking for will depend heavily on the price paid at auction, and the coverage and capacity conditions attached to the licences.
“There is a conundrum at the heart of the auction. To maximise revenue from the auction at this time of austerity the Government will need to take a light touch in terms of the imposition of build conditions. The operators will naturally want to rollout 4G principally in areas of high population density.
As with all telecommunications infrastructure rollout, they will face the law of diminishing returns beyond the big cities, and the major transport routes. OFCOM are however proposing to seek 'more uniformity of coverage for 4G services' and to 'significantly widen the coverage of mobile broadband to 95% of the UK population'. This chimes with the Government's agenda to promote the rapid deployment of rural broadband, (via its BDUK initiative) to which mobile is expected to be a contributor. However the current 'not spots' are by definition the least attractive places for the mobile operators to build 4G network coverage.
“My view is that imposing licence conditions requiring mandatory build coverage may be both a blunt instrument, (as there is a history of these types of conditions not being met, and then being relaxed after a time) and may also supress the revenues achievable by the auction. Perhaps different licence treatment is needed for the attractive and not so attractive areas to achieve the Government's goals.”