Ofcom must conduct the spectrum auction as soon as possible, says Vaizey

The government wants radio spectrum auctioned off as soon as possible

Communications minister Ed Vaizey has instructed Ofcom to hold the spectrum auction for the 800MHz and 2.6GHz radio bands as soon as possible, an auction that is key to government plans for universal broadband rollout.

In a statement on the Business Innovation and Skills (BIS) web site, Vaizey said: "we require Ofcom to co-ordinate a combined auction of 2.6GHz and 800MHz spectrum as soon as possible, so that operators can deliver widespread high-speed mobile broadband."

The 800MHz radio band will be made available following the completion of the switchover from analogue to digital broadcasting in 2012 and is the prime spectrum for mobile broadband services owing to its long range and penetrability.

Vaizey also said that the 3G licences bought by the mobile operators in 2000 would be made indefinite, but would have annual fees applied after the initial licence term ends in 2021.

The auction is critical for UK mobile operators and the UK as a whole, especially as the government has reiterated its commitment to finding alternative commercial models for the rollout of 2Mbit/s (the universal service commitment or USC) internet access until 2015.

Industry experts think that although the licences for the new spectrum will not be free, the price fetched by the auction is unlikely to reach the £22.5bn received for the original 3G spectrum auctioned in 2000.

The government could also attach conditions on spectrum auction winners, which would compel them to help with the government's USC as was done in Germany when the government auctioned its 800MHz radio spectrum.

The German government raised €4.4bn (£3.7bn) in that auction held in May.

German incumbent Deutsche Telekom, Spanish incumbent Telefónica, and UK mobile operator Vodafone were the big winners but were obliged to deliver service to 90 per cent of Germans by 2016.

Ofcom will also liberalise the 2G spectrum at 900MHz and 1800MHz, thereby implementing the EU’s revised GSM directive to allow operators to use these frequencies for 3G technologies.

The government is also asking Ofcom to carry out a competitive assessment of future 3G and 4G markets, including the potential for new entrants, which could see UK incumbent BT bid for the spectrum. Currently BT's mobile partner is Vodafone.

In the statement, Vaizey said: "Ofcom's assessment will inform the design of the auction, aimed at enabling delivery of new competitive mobile broadband services for UK consumer and business benefit."