UK LTE auction 'achieved objectives,' but economic efficiency still unclear

UK regulator Ofcom achieved its objective of maintaining a competitive market with a number of competing providers in the first major sale of radio spectrum in over 10 years, according to a report by the National Audit Office on the country's LTE spectrum auction in February 2013.

However, the national watchdog, which was tasked with conducting a study into the auction after a Labour MP raised concerns that the government failed to get value for money from the project, said it is not yet able to conclude that the auction was economically efficient.

The NAO said this is because it is not yet possible to assess whether those companies that were allocated spectrum during the auction are able to make the most effective use of it.

The auction raised £2.4 billion (€2.87 billion/$3.97 billion) and Ofcom estimates it will provide benefits for consumers estimated at £20 billion. The four existing national operators--EE, 3 UK, O2 UK and Vodafone UK--as well as new entrant, BT Niche, all won spectrum through the auction process, and the NAO commented that the four operators now hold sufficient spectrum to ensure their medium-term viability.

Since the auction took place, all four of the existing mobile network operators have started to roll out LTE services. However, "whether or not the auction succeeded in allocating spectrum to those who can make best use of it will start to become apparent only as the spectrum is brought into use by the winning bidders," the NAO observed.

The NAO report was published days after the Department for Culture, Media and Sport issued the UK Spectrum Strategy covering government policy on spectrum allocation and usage until 2025.

The government is already four years into a 10-year plan to release 500 MHz of spectrum below 5 GHz from public sector use by 2020. Speaking at the CeBIT trade fair in Hanover, Germany, this week, the UK Prime Minister David Cameron said the spectrum strategy aims to "double the economic benefits of spectrum to UK companies and consumers from roughly £50 billion today, to £100 billion in 2025". This would be achieved partly through the use of new technologies that would allow spectrum to be shared among different users.

Cameron also announced fresh efforts on 5G research and pledge to pump millions of pounds into the 'Internet of Things' (IoT). The Prime Minister said the UK is investing £73 million into IoT development--an area he said offers huge potential to boost productivity, improve healthcare, cut energy usage, and make transport more efficient.

For more:
- see the UK Spectrum Policy
- see the National Audit Office report

Related Articles:
David Cameron backs 5G development efforts; pumps funds into 'Internet of Things'
Neelie Kroes says 5G can put Europe back in technology driving seat
UK LTE auction comes under spotlight over weak return
Analysys Mason: What the UK spectrum auction bid data reveals
UK LTE spectrum auction draws £2.34B, below government expectations

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