Report: LTE access will save UK consumers £20B over next decade

The wide-scale deployment of LTE in the UK will save consumers £20 billion by providing them with access to high-speed mobile services, according to a report from telecoms regulator Ofcom.

Ofcom maintains the advantage access to LTE will bring to the UK public and the economy will "very significantly" exceed the immediate financial windfall raised by the auction, according to the Financial Times.

"Ofcom's LTE auction is designed to deliver the maximum benefit to the UK," Ofcom chief Ed Richards told the FT. "We believe that this is likely to be at least £20 billion over the next 10 years for consumers alone who will be able to access new digital services across the country."

"It will also make a very significant contribution to the UK GDP through new mobile revenues, employment opportunities and software development," he said.

Asked how Ofcom had calculated this huge saving, its economists told the FT they had used a "consumer surplus" figure--a measure of the benefit that consumers gain from purchasing goods and services, a method often used when evaluating the market impact of government intervention.

Bidding has started for the UK's LTE spectrum auction, which will see the companies bidding for frequencies in the 800 MHz and 2.6 GHz bands. EE, Vodafone, Telefónica's O2 UK and 3UK are all bidding, as is BT, Hong Kong's PCCW and managed networks firm MLL Telecom. While the UK government has publicly said the auction is expected to produce £3.5 billion in revenue, analysts have estimated that the amounts raised could be between £2 billion and £4 billion.

Ofcom, which is running the auction process, would not confirm the £3.5 billion figure, but added that the aim was for at least four different operators to win adequate spectrum to operate national LTE networks.

EE, Vodafone, O2 and 3UK are most likely to compete fiercely to secure the prime lower frequency bands better able to carry mobile internet services. The other three bidders--BT, PCCW and MLL--are expected to vie for higher frequencies more suitable for local area mobile broadband.

According to Ofcom, bids are being placed online over secure connections, using software that has been developed specifically for the auction. The bidding will continue over several rounds and is expected to take a number of weeks until the final winners are announced.

For more:
- see this FT article (sub. req.)

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