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UK 4G mobile auction fails to meet government expectations

Tim Gibbon (Social Media Portal (SMP)) - 20 February 2013

UK 4G mobile auction fails to meet government expectations

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Ofcom has announced winners of the UK’s 4G mobile auction with government predication of £3.5 billion target failing below expectations


Ofcom, the UK telecoms regulator, has released details of the winners of the UK’s 4G mobile auction with government predication of £3.5bn target falling well below expectations.  

The auction of the 4G mobile spectrum has raised £2.34bn, more than a billion pounds less than forecasted by the Office for Budget Responsibility (OBR) for the Treasury.  In its press release Ofcom reveals that after 50 rounds of bidding Everything Everywhere (EE), Hutchison 3G UK, Niche Spectrum Ventures, (a subsidiary of BT Group plc), Telefónica UK and Vodafone have successfully won spectrum.

4G mobile strives to bring faster internet access and download speeds for users, thought to be particularly useful for customers is rural areas, but has received a lukewarm response so far.  T-Mobile and Orange’s joint EE venture was the first to launch at the end of 2012, but in January had to already cut its prices.  Competing telecoms provider Three is reported to be providing its 4G services at no extra cost having listened to the negative feedback directed at EE and lack of interest from customers.  
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Ofcom claims that over the next decade, 4G will provide £20bn of benefits to UK consumers. Previous auctions such as 3G have been more successful - £22bn was raised at the auction of 3G spectrum in 2000.  The government’s feedback on what has been perceived as a lacklustre auction tries to downplay the outcome, stating that there is still potential to raise the difference between the projected auction revenue and what it was in actuality.

”The £3.5bn number at Autumn Statement 2012 was certified by the independent OBR and based on external expert independent analysis based on similar auctions, including the last 3G one,” stated a Treasury spokesperson.
 
Ofcom was keen to point out it was not its role to secure the best auction price possible, but to facilitate the right environment for commercial purposes and consumers.  Ed Richards, Ofcom chief executive, told BBC Breakfast this morning 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 added.

The UK government and Chancellor George Osborne has come under criticism internally from senior members and from the opposition stating that the projections were overestimated and that the incorrect figures have less than disappointing.



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