Report: UK operators will need to trade LTE spectrum to set mobile strategies

The outcome of the UK LTE spectrum auction is under debate as worries surface over the distribution of frequency bands and likely capacity constraints, according to a Financial Times report, which cited unnamed sources.

Emphasising that the results of the spectrum auction will dictate corporate strategies for the next five years, one unnamed auction participant told the FT that "there are some jaw dropping outcomes.

While Vodafone, EE, Telefónica's O2 UK and 3UK were successful in acquiring enough spectrum to deploy LTE services, the bands each operator has obtained were very different to what was expected.

"Some [operators] may struggle with capacity and others have too much of the wrong spectrum. I don't think that the distribution of spectrum is efficient and so I think that there will be trades," said another unnamed source involved in the auction.

Telecoms regulator Ofcom pushed back strongly against this view.  "The auction achieved our stated aim of delivering a highly efficient and competitive outcome in the allocation of LTE spectrum," it told the FT. "This is clearly reflected in the bids that took place during the auction, which we will publish shortly."

The issues revolves around EE's efforts to shift bids away from the highly-sought-after 800 MHz spectrum at a crucial moment in the auction process, resulting in lower prices and an unexpected allocation of the prized spectrum to 3UK.

This tactic, along with other bidding ploys, has left 3UK owning 800 MHz spectrum that it has not worked out how to use, while EE is likely to want more 800 MHz, analysts told the FT, having been left with less than is ideally required for nationwide coverage.

Vodafone is being called the winner of this auction with its aggressive bidding for the 800 MHz band, while Telefónica's O2 UK is viewed by analysts to have lost the chance to boost its spectrum resources, given it will be left with less overall than EE or Vodafone.

Industry observers remain perplexed by what BT will do with its LTE spectrum, having bought much more than expected to cover its stated aims of boosting Wi-Fi coverage across cities and local areas.

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

Related Articles:
Analysts: UK operators underpaid for LTE spectrum, for a variety of reasons
UK LTE spectrum auction draws £2.34B, below government expectations
Analyst: Vodafone, O2 have most to lose in UK LTE spectrum auction
EE slashes LTE pricing as UK spectrum auction gets underway
Report: UK LTE adoption dependent on price and performance
Analyst: UK LTE spectrum auction may have unexpected winners

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