Analyst: Vodafone, O2 have most to lose in UK LTE spectrum auction

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The outcome of the UK LTE spectrum auction will dictate the mobile broadband landscape for decades to come, according to new research from IHS Screen Digest. Among the existing mobile operators, those with the most to lose are Vodafone and Telefónica's O2 UK, which presently do not have LTE spectrum.

Of note, the firm believes there could be three winning bids for the critical 800 MHz band, as has been seen in other European spectrum auctions, leaving the four other registered bidders to launch LTE on the 2.6 GHz band.

"The [800 MHz] winners will have the bandwidth required to keep pace with the boom in mobile data--while the losers will struggle to remain competitive in the mobile market," IHS market analyst Daniel Gleeson said in a statement.

"Access to spectrum is the main barrier to entry for any company looking to build a new wireless network. The amount a company spends in the auction will affect their business performance for years to come," Gleeson noted.

Not securing 800 MHz licences would be a major blow for Vodafone and O2, as their current licences do not allow for the deployment of LTE, and relying on 2.6 GHz spectrum would severely limit their capability to cover most of the country. EE has launched its initial LTE service on refarmed 1800 MHz spectrum, getting a jump on its rivals, but it is bidding for the other frequencies as well.

IHS noted that the 800 MHz band is significantly more valuable than 2.6 GHz because of its better propagation characteristics, which results in the need for fewer cell sites and the ability to cover rural areas more easily. The firm claims that 800 MHz cells are approximately 10.5 times larger than 2.6 GHz cells transmitting with the same power.

Gleeson also said he believes that whichever companies are successful, there is a strong possibility that deals between existing operators, such as network and site sharing agreements, will need to be renegotiated if there is a mismatch in LTE spectrum holdings.

For more:
- see this IHS Screen Digest release

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