4G auction raises less revenue than expected

It's not exactly small change, but nor is the £2.34bn generated from the 4G auction exactly what the government would have liked.

The auction for a piece of the action/spectrum was forecast to net around £3.5bn for the Treasury, but the total bid fell well short of that amount. Although that's good news for the winning bidders Everything Everywhere, Hutchison 3G UK (Three), Niche Spectrum Ventures (part of BT), Telefonica (O2) and Vodafone. It might also be good news for us, the consumer, too. After all, if they are paying less, it could mean less pressure to charge a premium price. That's the theory, anyway.

Vodafone topped the bidding at £791m, which bagged it five chunks of spectrum. Sounds like Vodafone will be going big with 4G this summer, which might not be good news for EE and its current offering.

Speaking to the BBC, Ofcom chief executive Ed Richards said the figure was lower because 'we are in very, very different times.' He added: "What we were trying to do was ensure that a valuable economic resource was brought into productive commercial use."

In light of criticism, a Treasury spokesperson defended the original figure: "The £3.5bn number at Autumn Statement 2012 was certified by the independent OBR and based on external expert independent analysis based on similar auctions, including the last 3G one. The final auction revenue will be accounted for at Budget in the usual way.'

Ofcom auctioned the spectrum in two bands - 800MHz and 2.6GHz, equivalent to two-thirds of the radio frequencies currently used by tablets, smartphones and laptops.

According to Mr Richards, it 'will allow 4G networks to achieve widespread coverage as well as offering capacity to cope with significant demand in urban centres'.

He said: "4G coverage will extend far beyond that of existing 3G services, covering 98% of the UK population indoors - and even more when outdoors - which is good news for parts of the country currently underserved by mobile broadband."

Source: BBC

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