4G bidders to be confirmed as Ofcom auction begins

4G bidders to be confirmed as Ofcom auction begins

Seven companies have declared their interest to bid for 4G spectrum as part of Ofcom's auction, with the process expected to raise somewhere in the region of £3.5 billion.

The final line-up is set to be unveiled by the telecoms watchdog today, with the organisation set to issue passwords for the electronic auction system.

Each of the prospective bidders, which include the likes of O2, Vodafone, BT and MLL Telecom, will be hunkering down to come up with their own bid for the spectrum and airwaves made available in the UK.

The new spectrum will boost the amount of airwaves available to mobile phones by more than 75 per cent in the UK and will go some way to meeting the growing demand for mobile data among users, particularly professionals, as more and more companies are allowing their staff to use their own devices for enterprise-purposes.

After a series of training sessions, the 4G bidding is expected to begin in earnest on January 23rd, with six rounds a day expected to take place, as participants compete for their preferred lots.

Winners could be announced in early March, with the likes of Vodafone and O2 in a position to launch 4G services in May or June if they are successful.

The auction could also set a new benchmark for the annual licence fees for spectrum that mobile networks acquired in the 1980s and 1990s, which has raised concern among providers.

Currently networks pay rental costs of £65 million a year, but if the sale of the 4G spectrum raises twice the £1.3 billion reserve set by Ofcom, the government could increase rentals.

According to industry estimates based on Ofcom data, the fees could rise to as much as £700 million if the reserve is trebled, a distinct possibility as experts are predicting the sale to raise somewhere in the region of £3 – £4 billion.

In a letter to civil servants published on the website of the Department for Media, Culture and Sport, which oversees telecoms, Vodafone indicated there is now "significant uncertainty" created by the change in the way licence fees are calculated.