Ofcom defines 4G to include Long-Term Evolution (LTE) and WiMax communications and the U.K. needs the technology and spectrum to provide high bandwidth, such as streaming video, for mobile users. 4G will allow mobile bandwidth to approach that of current ADSL wired connections.
The auction is due 1Q12 with a view to deployment of services in 2013. This puts the U.K. some way behind such territories as the United States and Japan, which already have some 4G networks. Ofcom is also building conditions into the auction procedure to ensure coverage of 95 percent of the population and competition in the form of ensuring there are at least four national wholesale 4G service providers.
The auction will be for two spectrum bands – 800 MHz and 2.6 GHz. The lower frequency 800 MHz band is part of the digital dividend, which is being freed-up as the UK switches from analog to digital TV. This spectrum is ideal for widespread mobile coverage. The 2.6 GHz band is at a higher frequency, and is ideal for delivering the capacity needed to deliver higher speeds. These two bands add up to 250 MHz of additional mobile spectrum.
The auction is also likely to be boon for the government. The last auction of spectrum, for 3G spectrum which took place in 2000, raised £22.5 billion (about $36.7 billion).
The increased mobile penetration and significance of mobile to people's lives and businesses is thought to make the next auction even more valuable. However, there it is also thought that the service providers who did gain 3G spectrum paid too much and that this slowed deployment down for many a number of years. There is a precedent in Germany where in May 2010 an auction of spectrum across 800 MHz, 1.8 GHz, 2.0 GHz and 2.6 GHz frequency bands.raised only 4.38 billion euro (now about $6.2 billion), which compares with 51 billion euro (now about $72.5 billion)