4G: The results are in

Smartphone user En route to faster data?

The prize was, in theory, extremely valuable - the spectrum needed to bring fast new mobile phone services to customers across the UK. But at the end of a complex bidding process, the 4G auction has raised £2.34bn - about a 10th of the price paid at the 3G sale 13 years ago at the height of the dotcom bubble. It's also more than £1bn short of what the chancellor estimated in his autumn statement.

Ofcom is, however, congratulating itself on a smooth auction process, with no leaks during the secret bidding rounds over the past month. The regulator says it was not its job to extract the maximum price for the Treasury, but to secure the best possible outcome for consumers.

So Ed Richards is pleased that along with the four existing operators - Vodafone, O2, EE and Three - the winners include a new player, Niche. You may not have heard of this company, but you'll know its owner BT.

Britain's biggest telecoms provider got out of mobile phones a decade ago when it sold off Cellnet, which became O2. Now it is back with a healthy chunk of the 2.6Mhz spectrum which is best suited to handling high data traffic in cities. BT is stressing that it is not planning to operate a national mobile network, but will be using its spectrum to boost its fixed and wi-fi networks for businesses and consumers.

Why was the bidding so low?

Rory Cellan-Jones reports on the 3G auction in April 2000

Perhaps because the bidders had watched the experience of EE, which was allowed to launch its 4G network early. Despite a very high profile advertising campaign, results yesterday appeared to show that its customers had only a limited appetite for the new service. (I speed-tested the 4G network last October.)

Even if the Treasury is disappointed, the auction may be good news for the 4G rollout. We can now expect plenty of competition to offer fast new mobile services across the UK. But those people in 3G "notspots" will be hoping that this time they will not be left out of the faster future.

Rory Cellan-Jones Article written by Rory Cellan-Jones Rory Cellan-Jones Technology correspondent

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  • rate this

    Comment number 16.

    This Government has allowed us to fall behind other nations with 4G to allow the auction process to take place, then shot themselves in the foot by allowing EE to have it early. EE found little demand and the industry's wallets tightened.

    Technology and communication are key to growth. Massive broadband and wireless expansion, that's the infrastructure investment the Tories need to announce.

  • rate this

    Comment number 15.

    10 Andrew D

    Arguably, improving 3G coverage before rolling out 4G would be like insisting on expanding the canal network before building any railways.

    In theory, the lower frequency that 4G will use outside the major conurbations should make it a better bet than 3G in terms of coverage. Whether that proves to be the case in practice remains to be seen!

  • rate this

    Comment number 14.

    Firslty, the telcos can model the costs and benefits of LTE much better tha 3G precisely because it offers no killer apps. Then, since the EU has stomped on their internal cross-subsidy business models, they're in less of a position to take risks. And there are all those millions of cancelled contracts in the struggling Eurozone countries: it's not a good time for expensive new infrastructure.

  • rate this

    Comment number 13.

    @ 1.mike - I completely agree with all 3 points, especially point 3 - Kevin Bacon.
    The adverts with Kevin Bacon have become as irritating as the old Halifax adverts with the singing bank staff. If anything is guaranteed to turn me off EE, its those adverts.

  • rate this

    Comment number 12.

    7.bobbo "George Osborne's creative accounting needs to be exposed."

    George Osborne may have had £3.5 billion in his budget for this but the £3.5 billion figure was produced by the Office for Budget Responsibility which is independent from government.



  • rate this

    Comment number 11.

    So EE had good reason to make its initial launch perform badly, with crazy prices and usage caps? This reduced the price they had to pay for other spectrum later?

    For all the talk of clever Game Theory being used in the design of this auction, that's a gaping loophole.

  • rate this

    Comment number 10.

    I live in the Highlands of Scotland near Inverness. I have been on Vodafone and GiffGaff (runs through o2's network) and the only place I get 3G signal is in Inverness. Everywhere else is a patchy 2G signal that deteriorates rapidly indoors. Will 4G really be any better? Should they not improve 3G coverage first?

  • rate this

    Comment number 9.

    3g is poor in rural areas due to the frequency 4g on 800mhz will greatly improve rural speeds and in building penetration.

  • rate this

    Comment number 8.

    EE's 4G failed not because there isn't demand but because their prices were ridiculously high with very low usage caps.

  • rate this

    Comment number 7.

    George Osborne's creative accounting needs to be exposed.

  • rate this

    Comment number 6.

    Reason for failure is simple....the word greed springs to mind

  • rate this

    Comment number 5.

    Higher data speeds with lower caps on allowable data use. Not too surprising EE's 4G offering flopped.

  • rate this

    Comment number 4.

    Wish the goverments stopped taxing profitable industries in order to fund the banks/house builders and causes prices to rise.

    Why is radio taxed so much while land is not taxed at all?

    4G is not needed, a better coverage of 3G would be much more appreciated. The coverage is pathetic and the speed is not so much of an issue compared to the capacity/performance and congestion problems.

  • rate this

    Comment number 3.

    I use a MiFi unit running on 02 and it is as fast as I need for anything including streaming Sky TV etc. and I can run up to 5 connected units via WiFi including smartphone and iPad plus the regular PC.

    I really don't know exactly which system is used, the screen reports variously 3G and H, but clearly it isn't 4G and frankly I don't care.

    I have no use of 4G as far as I can see.

  • rate this

    Comment number 2.

    Because the expectations were made by idiots.

  • rate this

    Comment number 1.

    Reasons for EE's Failure thus far:

    1) Target 4G customers were 'early-adopters' of new tech. Unfortunately for EE, these people are often more aware of the technicalities of things like data-caps, (and more likely to hit them)... the caps were FAR TOO LOW to attract people off 3G
    2) Prices were too high, which wouldn't have been too much of a problem if 1) wasn't in place
    3) Kevin Bacon


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