Audit office to investigate low returns from UK LTE auction, paper says

16 Apr 2013

The Guardian newspaper writes that the UK’s National Audit Office (NAO) is to carry out an investigation into the low prices realised from the country’s recent auction of 4G mobile spectrum. The tender, which was concluded in February this year, generated around GBP2.3 billion (USD3.5 billion) for state coffers – around one-third less than the government’s original forecast of GBP3.5 billion. The paper now claims that Amyas Morse, the NAO’s auditor general, has written to Labour MP Helen Goodman, the Shadow Minister for Media and Communications, to inform her of his intention to: ‘conduct a value-for-money study of Ofcom’s recent auction of 4G spectrum’. The investigation was triggered, it says, following comments made by the head of Ofcom following the auction, who defended the lower bid levels by arguing that ‘maximising the auction price’ was never designed to be the sole purpose of the tender process. It is understood that the NAO will now investigate whether the lower-than-expected monies for the state budget will be offset by the wider benefits of lower retail costs for end users.

According to TeleGeography’s GlobalComms Database, in February 2013 Ofcom revealed the names of those companies that successfully bid in the country’s auction of fourth-generation spectrum. Following more than 50 rounds of bidding, five bidders emerged with new frequencies, with all four of the country’s existing mobile network operators laying claim to spectrum. Ofcom auctioned off a total of 250MHz of spectrum across two different bands – 800MHz and 2600MHz – with Vodafone agreeing to pay the most for its new frequencies; it bid GBP790.8 million for 2×10MHz in the 800MHz band, in addition to 2×20MHz of 2600MHz and 1×25MHz of 2600MHz (unpaired). EE, the country’s largest cellco by subscribers, spent GBP588.9 million on 2×5MHz in the 800MHz band, as well as 2×35MHz in the 2600MHz band, while the market’s smallest operator, Hutchison 3G UK (which operates under the ‘Three’ banner) was allocated 2×5MHz of 800MHz spectrum in return for GBP225.0 million. Rounding out the existing players, O2 UK bid GBP550.0 million for 2×10MHz of 800MHz spectrum. The final winning bidder is BT subsidiary Niche Spectrum Ventures which paid GBP186.5 million for 2×15MHz of 2600MHz and 1×20MHz of 2600MHz (unpaired) spectrum.