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

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  • rate this

    Comment number 36.

    £1bn is a pretty big shortfall; that's really going to eat into MPs' Nando's budget. Osbourne is going to have to make it up elsewhere or the poor politicians are going to starve!

  • rate this

    Comment number 35.

    It's scandalous that the government can charge for the use of radio waves in the first place

  • rate this

    Comment number 34.

    The treasury are caught short? Or the phone companies are basically sticking 2 fingers up at the treasury for over-charging?

  • rate this

    Comment number 33.

    Why have an auction at all?

    It makes far more sense to me for OFCOM to rent out the available spectrum (on a "want more - pay more" basis) - so that the Treasury receives income for years to come.

    But no... lump sum auction it is... and just in time for a tax bribe come Budget day...

  • rate this

    Comment number 32.

    Perhaps the experience of EE is that their customers aren't stupid enough to pay more for a super-fast mobile broadband that hits the monthly data limit within an afternoon.

    Or people have figured that when HSDPA can give them up to 7mbps download speeds already there's nothing to be gained. It's not as if the latest "unmissable" twitface status update is going to come down any faster.

  • rate this

    Comment number 31.

    Perhaps people are realising that looking out of the window on a train is far more beautiful and rewarding than pretending to be sooo busy and important ??

  • rate this

    Comment number 30.

    Isn't the reason simple. if you have 5 licences and 4 people who 'need' one for their business and a few other who would kind of like one your never going to get a good price.
    They should have auctioned off 1 or 2 licences then the big 4 would have had to fight over them...

  • rate this

    Comment number 29.

    Re: #4
    They are 2 completely different things. This story is about the government selling the rights to use something they own; so not a tax.

    They don't own all the land so they can't (morally) tax people to use their own land, property or whatever. Doesn't stop them trying mind but then governements and morals are complete strangers.

  • rate this

    Comment number 28.

    Please remind me how the former Labour adviser Ed Richards justifies his £381k (+expenses) pay as a civil servant.

  • rate this

    Comment number 27.

    Try the fact that 4G is nothing more than a buzzword invented my the media and interested parties, in order to sell a product to the consumer.

    UMTS (3G) and LTE (4G), both operate on the same standard (IMT-2000).

    Industry insiders know this, so why pay so much for something that's barely a step forward?
    To gain a little profit from consumers who've been sucked in by all the hype.

  • rate this

    Comment number 26.

    The only potential losers in this are non-mobile using tax payers. With the operators paying less that means there is less to pass on to their customers so 4G bills should in theory less than they could have been. Having not received a £1b that they have budgeted on having, it now remains to be seen if the government pass this short fall on to taxpayers or not.

  • Comment number 25.

    All this user's posts have been removed.Why?

  • rate this

    Comment number 24.

    EE managed to depress the sales and usage of 4g by capping downloads and high prices. This should have been obvious to the regulators and they should have forced EE to play fair or removed their licence! If the amount of offers is not as predicted they should have had a reserve price and made sure that the reserve would have generated the predicted amount of revenue!

  • rate this

    Comment number 23.

    Not surprised the Chancellor's estimate was adrift -----he seems to get most things wrong.

  • rate this

    Comment number 22.

    It's EE's fault, entirely. Had they really found the "sweet-spot" on pricing (surely a phrase that will haunt them?), there would have been a huge take-up of their service. And then a bigger scramble for the rest of the spectrum, and thus a higher return for the treasury. Instead, EE's greed resulted in little interest and low take-up amongst consumers, and thus low bids from competitors.

  • rate this

    Comment number 21.

    Who cares - get a life !!!

  • rate this

    Comment number 20.

    Because Gideon isn't very good at sums and adding up.

  • rate this

    Comment number 19.

    "Why did the 4G auction come in at £1bn below expectations?"

    Because it was hyped-up out of all proportion ... and people have grown weary of hype and sensationalism.

  • rate this

    Comment number 18.

    The first roll out of 4G was designed to be a flop so the industry mafia could get it on the cheap.

  • rate this

    Comment number 17.

    The price for the service is beyond reason. Paying that much for 4G feels like throwing £50 notes into a fire. The Kevin Bacon adverts clearly show that you need a nice house in the centre of London to get the full advantages of it.


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