The auction for spectrum that is needed for the rollout of '4G' services in the UK is unlikely to happen until 2011, the country's independent spectrum broker has said.
The 2.6GHz spectrum auction was originally scheduled for 2008, but was subsequently pushed back to 2009 by a legal challenge from T-Mobile and O2. On Tuesday, independent spectrum broker Kip Meek — appointed by the government to find a way through the various disputes blocking the auction — said the idea of the auction occurring in 2010 was "a real stretch".
Meek was speaking to ZDNet UK at a Westminster eForum on the spectrum implications of the switchover from analogue to digital television — a shift that could free up more spectrum in the 800MHz 'digital dividend' band for services such as 3G mobile broadband.
Spectrum in the 2.6GHz band, the so-called '3G expansion band', can be used for the long-term evolution (LTE) of 3G. LTE, generally known as '4G', is a much faster alternative to current mobile broadband technologies.
Some UK operators are opposing an auction of 2.6GHz spectrum until they know whether they will be permitted to run long-distance 3G services in the 900MHz band, which is currently used for 2G. Until they know whether they will be able to 'refarm' 2G in this way, they will not know how much to bid for 2.6GHz, they have said.
The 800MHz band is also crucial, as the government wants to auction this spectrum off at the same time as it sells off 2.6GHz spectrum.
Speaking on Tuesday, Meek said the legal challenge lodged by T-Mobile and Orange, together with threatened legal action from BT, meant the outcome of his proposals for 2.6GHz allocation was "uncertain".
"There is also some concern among [the operators], in the context of a T-Mobile-Orange merger, whether enough is being done to preserve [the operators'] position," Meek said.
"The government will be considering its response to the consultation paper, [but] that process is taking longer than originally anticipated. They will have to take a view whether, in the dying months of this government, they will want to push through with this particular set of proposals."
Behind the spectrum dispute
In May 2009, Meek made his spectrum-allocation proposals to the government, following which the government set up a new consultation on the matter. The consultation has since been extended until February.
In his recommendations, Meek said Vodafone and O2 should only get chunks of 800MHz if they give up an equivalent amount of the 900MHz spectrum they already have.
T-Mobile and Orange have no 900MHz spectrum, so Meek suggested they be allowed to freely bid for 800MHz. He also said they should be able to bid for only limited amounts at 2.6GHz, unless they give up their allocations at 1800MHz or 2.1GHz.
Meek also proposed that the UK's 2.1GHz 3G licences should be made indefinite in length, in exchange for promises from operators to improve their 3G coverage. The licences, allocated in 2000 at a collective cost to operators of £21bn, covered a 20-year period when awarded.
At the end of 2009, BT threatened legal action against the government over this proposal, which it described as "a gift of several billion pounds from the UK taxpayer to the mobile operators and… a barrier to competition and innovation in the mobile market".
In addition to the legal actions, another factor could be hindering the 2.6GHz allocation, suggested Chris Doyle, a telecoms consultant with Apex Economics. He said the upcoming election had "slowed down" the digital switchover, and therefore held up the freeing up and auctioning off of 800MHz spectrum.
However, as a result of the delay, bidders "ought to become better informed" about how to use 800MHz and 2.6GHz spectrum by the time the auction comes around, and so it could be a good thing, according to Doyle.
"The big mistake back in 2000 was that the bidders were, to some extent, working in the dark and were somewhat naïve, and most definitely overbid for particular spectrum," he said at the London e-Forum.
Telecoms lawyer Rod Kirwan, of Denton Wilde Sapte, predicted at the same event that the UK "won't see any auctions this year".
"I think we will be very lucky if we see any auctions next year," Kirwan said, citing four reasons for the delay: BT's complaint, the regulatory process for approving T-Mobile's merger with Orange, the complexity of the combined auction process, and the licence fees that will be associated with the auctioned spectrum.
In his remarks, Meek also said that institutions including the International Telecommunication Union (ITU), European Commission, European national governments and regulatory authorities are "not fully capable of good policy-making with respect to spectrum".
"We are, at the moment, in danger of not making decisions about spectrum, and that will be incredibly damaging for European consumers and European competitiveness, and that would be a tragedy in my view," Meek said.
Some European countries have already allowed 2.6GHz spectrum to be allocated. The Scandinavian countries are already rolling out experimental LTE services, for example, and Germany will begin its auction in the first half of this year.
