The UK Government have been left red faced as the 4G auction raised £1.2billion less than they had forecast in their Autumn Statement. The £2.3billion auction saw Vodafone spend the most, bidding £790million to secure blocks in both available wavelengths.
The auction to sell off the UK’s 4G spectrum was projected to raise £3.5bn which the government had intended to use towards it’s deficit reduction program but the results from the auction will leave the Treasury facing a huge new gap in their projections and will be devasting news after Chancellor George Osborne has already had to adjust his spending projections after the country entered a double-dip recession.
The £2.3bn figure was raised after Vodafone, O2, Three and BT were joined in the UK market by EE, with all 5 securing holdings in either the 800MHz or 2.6GHz bandwith, with both Vodafone and EE securing a portion of both.
EE joined Vodafone in securing blocks on both bands with a bid of £588million, while Three paid £225million for access to the 2.6GHz band and BT wil be happy with the £186million they paid for access to the 800MHz band. O2’s commitment comes in the form of £550million to secure blocks in the “coverage obligation lot”, which was set up to insure that the majority of UK residents had access to 4g. To meet this commitment O2 will need to get 98% coverage by population.
The loss of £1.2bn will cause an enormous headache for the government, but Ofcom are taking a more positive look, with Chief Executive Ed Richards claiming it was “a positive outcome for the UK,” adding “This will lead to faster and more widespread mobile broadband, and substantial benefits for consumers and businesses across the country,”
He further believes that the “coverage obligation lot” will benefit the public as “”4G coverage will extend far beyond that of existing 3G services, covering 98 percent of the UK population indoors, which is good news for parts of the country currently underserved by mobile broadband.”
The income generated from the 4G auction represents around a 90% reduction since the 3G auctions, where providers paid £22.5bn for the available licenses.