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back to article Mobe networks bag UK 4G for a steal - £1bn shy of Osborne's £3.5bn

The rights to use Blighty's 4G frequencies were today sold to UK operators, plus a BT subsidiary without national aspirations, raising a mere £2.3bn for the Treasury. That's somewhat short of Chancellor George Osborne's expectations of £3.5bn. EE (which also operates the Orange and T-Mobile brands in Britain), Three, O2 and …

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MJI
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Facepalm

More TV spectrum gone!

I suppose they will be after the satellites next!

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Anonymous Coward

Re: More TV spectrum gone!

They are. They're trying to get at C-Band satellite spectrum now. They won't be happy until they have it all.

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Stop

Re: More TV spectrum gone!

That was always the plan. Analog TV was rather spectrum inefficient (mainly because you had to allocate multiple frequencies to a single channel and allow lots of distance between transmitters using the same frequency otherwise you'd get ghosting). Digital TV allows you to use the same frequency across the whole country for a multiplex of 6+ channels.

UK TV channels are allocated in 8MHz blocks. The 700MHz band alone is enough for 12 multiplexes, and we currently only have 10 in use (including 1 DVB-T2 HD multiplex)

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MJI
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Re: More TV spectrum gone!

It wasn't always the plan, originally I read it was to be for more channels, mainly high definition, and also save some space for what ever replaced HDTV.

So instead of the lovely clear 720x576i SD picture we got in the early days (with good quality IDTV) we have the over compressed rubbish we now have.

Why can't we have high bit rate DVD like SDTV and proper 1920x1080 HDTV?

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Re: More TV spectrum gone!

"Why can't we have high bit rate DVD like SDTV and proper 1920x1080 HDTV?"

Because increasing numbers of people want high speed broadband on their mobiles and spectrum is a finite resource. There are other ways of delivering high quality video to people's homes.

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Freudian slip?

EE, already the UK's largest operator and holding considerably more spectrum than anyone else, bought loads - 10MHz of prime spectrum in the old TV bands at 800MHz, and 70MHz at 2.6GHz to compliment its already-expensive holdings.

Was that last bit a dig at EE's love of price-gouging or should it have read "already-extensive holdings?"

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(Written by Reg staff) Silver badge

Re: Freudian slip?

No, just an early draft. Everything should be spick-and-span now.

C.

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Re: Freudian slip?

Indeed, and I compliment you on the result. (Yes, it's okay, in the current version.)

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Coat

"70MHz at 2.6GHz to compliment its already-expensive holdings"

Is that a sort of "hey, I like the direction of your Poynting vector" thing?

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Interesting that Three haven't gone near any 2.6Ghz.. I wonder whether they're thinking building penetration is bad enough at 2.1Ghz and therefore want no more troubles with building penetration?

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They've got the 1.8Ghz they bought off EE too.

Is it significant that Three have less bandwidth at 800Mhz than everyone else - 2x5Mhz? Will that cause them capacity problems?

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Boffin

I think not, they are working on the basis that they already have lots of 2.1GHz transmitters spread around, 2.6GHz is sufficiently similar that it won't help them achieve higher reuse, they just need to turn down the 2.1GHz power a little.

800MHz will be useful to help them fill in the areas where they currently don't have coverage and rely on Orange (or EE now) for roaming agreements.

New phones are going to be all band/mode capable (or enough combinations of the two to cover the allocated spectrum) so they should change seamlessly between the different spectrum and in fact managing that will be easier with fewer frequencies than with more.

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Ha, ha!

That's somewhat short of Chancellor George Osborne's expectations of £3.5bn.

Only by virtue that Osborne wanted to totally take the piss by trying to repeat the 3G cash bonanza. Good to see some sanity is restored, although 1bn is still a shed load of money.

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Re: Ha, ha!

You need maybe 2x15MHz of paired spectrum to build an FDD LTE network. 2x20MHz perhaps to be comfortable. Three and EE already had enough spectrum at 1800MHz even before the auction, so they could have even sat the whole thing out if prices got ridiculous. (Although, as one piece of spectrum was reserved for Three, they were immune from this anyway).

However, up for auction was 2x100MHz of paired spectrum. This was at least 2x60MHz more than was actually needed. Therefore, nobody paid much more than the reserve price. Blind Freddie could have predicted that.

The one thing in this that surprises me is that O2 only bought 2x10MHz. Are they sure that is enough? Also interesting is that the operator with the least need for more spectrum (EE) bought the most. I am guessing this is mainly just "It was cheap, and better safe than sorry".

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Go

Re: Ha, ha!

I think O2/Telefonica is getting its existing spectrum liberalised.

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Re: Ha, ha!

The don't have all that much of it, though. Something like 2x7.5MHz at 900MHz (being used by 2G), a tiny allocation at 1800MHz (being used by 2G), and 2x10MHz at 2.1GHZ (being used by 3G). There is no obvious place in their spectrum holdings to put LTE that isn't both an uncommon place to put it in Europe (900MHz LTE does exist in theory, but I can't think of any actual network being built that uses it. 2.1GHz LTE exists in Korea and Japan, but "European" handset variants generally don't support it) and already being used anyway.

O2 have the smallest total spectrum holdings of any of the four operators after today - much less than Vodafone and EE, and significantly less even than Three, who only have 3G and 4G networks to support, rather than the three generations supported by O2.

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Re: Ha, ha!

He should have read the small print; "Up to £3.5bn. Actual amount received may vary".

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Cheap contracts then? Oh no, wait..

So, given that they spent only 10% on the licences compared to 3G, does that mean we can get 4G contracts at something around 10% of the cost?

Ok, maybe 30?40?50? percent even for a reasonable rollout cost?

No..wait.. thats not likely is it.

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Stop

Re: Cheap contracts then? Oh no, wait..

The cellco's still need to build out the hardware to implement 4G, that's far from free. It's probably the most expensive part of the process, and blowing huge wads of cash on the original 3G licensed probably slowed the rollout of actual 3G base stations considerably.

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This is good news for the consumer, the less it costs them, the less they need to hike prices to pay for it...

And Yes we loose some TV spectrum, but in all honesty, there are only about 10 watchable channels out of the 50+ I get on freeview anyway....

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Unhappy

@MrXavia

"This is good news for the consumer, "

Only in some parallel universe, where government adding a tax bill of £2.3bn to the costs of 4G roll out is a good thing.

There are only this handful of companies able to make use of the spectrum. The whole "auction" is a crappy charade, dreamt up by civil servants as a ruse to extract more money that government can then waste on crap.

And when it turns out that 4G will only be built to provide any worthwhile quality of service in areas already served by good 3.5g, and likewise also served by cable and good ADSL, I hope people will remember that having identified that the companies might be relieved of £2.3bn, instead of insisting that be spent as a contribution towards a universal service, the twerps of government decided to just take the money and waste it like the rest of the tax and borrowing income.

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Re: @MrXavia

This is such neo-liberal nonsense. Sure government like individuals and private business are not immune to terrible spending decisions. However if you or anyone you know uses the education system, the heath system, the road system, etc. etc. you'd realise that your tax spend does more work for your benefit then any other pound you spend.

Capitalism when it works is a product of well regulated big government. When the regulations are moth balled you get financial crisis. Germany is a perfect example of how tax and spend big government is essential for healthy capitalism and Greece is a perfect example of low tax take, weak government economic disaster.

If you want lower prices you need regulation to constrain cartels and support smaller players - which this auction did and to price cap - which of course will never happen and whih I assume you would never want to see.

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10?! Did you slip in to Base2 for that comment?

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Re: @Matt2012

"However if you or anyone you know uses the education system, the heath system, the road system, etc. etc. you'd realise that your tax spend does more work for your benefit then any other pound you spend."

Utter drivel. The roads I drive on are potholed and congested because of the circa £35bn raised in roads taxes, barely one quid in six is actually spent on roads. I've recently opted to take my son out of the state system and pay for his education because he simply isn't being given an adequate education. I don't want to pay a five figure sum for his education, when the bunglers of government are already taking the money off me for an education service, but I'm not prepared to compromise his chances with the shoddy state education, which in my area has been a poor performing LEA for at least the last two decades. And my local hospital has such appalling care that it recently starved an elderly patient to death. So far from being "neoliberal nonsense", it's actually based on my experience of the shitty "public services" that I'm forced to pay for, but which if there were a choice I simply wouldn't pay for. So fuck off and fill your boots with all those lovely, lovely "public services", because you're welcome to them.

And capitalism a product of well regulated big government? What shite. Public spending has never been higher than when that pair of traiterous idiots Blair and Brown failed to regulate themselves (doubling the national debt) or the banks (leading to the financial crisis). How much more "big government" do you want?

In your weak understanding of economics you quote Greece and Germany, failing to understand that the German economy benefits from an undervalued exchange rate precisely because the Greek economy suffers from too high an exchange rate. if you're not clever enough to understand such basic finance, then maybe that's why you believe in big government.

And finally, "and to price cap - which of course will never happen and whih I assume you would never want to see". You presume to put words in my mouth? Why bother with debate when you're so fucking clever that you can mind read?

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Paris Hilton

Re: @Matt2012

I am loathe to admit that you are correct.

Maybe it is a people thing?

After 1945 maybe there was a sense of public duty that has somehow diminished with time and from generation to generation.

So now any employer is just a means to provide income no matter if publicly funded or privately.

Besides even public funded private enterprise seems a bit of a dull witted solution as the public authorities (probably UK Treasury?) set the model for all local authorities to support and work to. So it really is not a private enterprise solution at all.

Admire Germany all the same - it seems to show the importance of having lots of separate funds outside of civil servants reach.

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2G for me

I've set my phone to use 2G networks only, with a noticeable improvement in battery life. Try it, live slowly.

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Re: 2G for me

But you're probably using more power per megabyte. Having said that, I'm using a 2G SIM in my phoneslab, and a Three 3G wi-fi portable hotspot, on a reasonably good deal.

As potential future subscribers to 4G, the money that companies spend on radio licences is our money - potentially. If we put off upgrading, then it isn't.

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Anonymous Coward

At least if they paid less they may roll it out quicker and have to charge less for it...

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Go

Coverage obligation chunk worth more than expected

I thought the price paid for the coverage obligation lot was interesting - O2 only spent a little less on their 2x10Mhz with strings attached than EE did on their 2x5Mhz in 800Mhz sans strings and large chunk at 2.6Ghz.

Given the moaning from the operators about it, it seems they valued having 20Mhz as opposed to 10Mhz much higher than they let on.

Also interested to see what Voda and EE end up doing with their significant chunks in the 2.6Mhz band.

Fun times ahead for the spectrum geeks!

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Re: Coverage obligation chunk worth more than expected

LTE supports scalable carrier bandwidths up to 20MHz in size. Performance is best if you have 2x20MHz to use, but generally, wider contiguous chunks of spectrum are better than narrower chunks, or the same amount of spectrum made up of non-contiguous chunks. (If you look at all the trading of spectrum that has been going on in the US, a lot of it is about trading non-contiguous spectrum allocations in order to get wider ones). It was clear from what they were saying that Vodafone wanted one of the 2x10MHz allocations at 800MHz, and that they were willing to pay over the odds for it. That they wanted 2x20MHz at 2.6GHz for maximum performance in cities is not surprising either. It's pretty clear though that Vodafone's engineers told the management to get the widest possible allocation that they could at 800MHz and to get the maximum 2x20MHz that can be used by an LTE carrier at 2.6GHz, and they did.

I am not sure how wide the carriers EE are using at 1800MHz are, but they certainly have enough spectrum to use 2x20MHz at some point if they want to. Plus they now have the ability to do the same thing at 2.6GHz if they want to at some point in the future.

Three have presumably decided that using 1800MHz is preferable to 2.6GHz for a variety of reasons, and that 2x15MHz there (along with support from 2x5MHz at 800MHz) will do. They are likely right, but I thought they might buy some spectrum at 2.6GHz as well to be on the safe side. They didn't, but they likely have enough.

I am very surprised that O2 only bought 2x10MHz though. Certainly they win the "Network most likely to have capacity constraints" title.

It will be interesting to see how this develops. In 3G, all five (and then four) networks had fairly similar spectrum allocations to work with. For 4G, there are now vast differences.

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Happy

4G, very nice

Wonder when I will get f'ing 3G reliably.

They seem so focused on tomorrow they forget about today.

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Stop

Re: 4G, very nice

You seem to have missed out on the fact that 4G on 800MHz will give much better rural coverage than 3G on 2.1GHz. The 2.1 and 2.6GHz bands are all well and good for urban coverage, but need many more base stations to cover the whole country.

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FAIL

Efficiency

> the auction process is used on the premise that he who pays the most has the most incentive to use the bands effectively.

That would be efficiency of capital not efficiency of spectrum.

Price-gouging effectively is an "efficient" use of capital but it says nothing about what most people think of as "efficient" i.e. higher production output per employee or per machine.

Since we all pay via higher bills, this is a transfer from people to government - a tax. What they should have done, is give the spectrum for free based on proposals and fined the companies if they fail to carry out the proposals. That would have made us all better off.

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Dont have 3G...

Where i live, maybe 1 day we will get it or 4G not holding my breath though.

To be honest, 3G is plenty fast enough, i have 1G data limit, so i cannot really stream films / iPlayer etc. so whats the point? I get emails / read news / read twitter / facebook - alll of which work very well on 3G.

Plus, the plan are crap for 4G, will have to come down to what i pay now before i am interested.

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WTF?

Re: Dont have 3G...

I never understand this, how will 4G help streaming at the consumer end?

It takes 10 mins to watch 10 mins of video, as long as the connection can supply the content fast enough to keep the buffer full any excess bandwidth is irrelevant. It only helps d/l times or possibly latency, neither of which are a problem for most people on 3G, assuming the cell/back haul is not congested. There is no reason to believe that the level of cell and back haul congestion will differ between 3G and 4G. Is the suggestion that people want HD content on the microscopic screens of their phones? Who watches video on their phones now? Who has the time? Can someone explain what the great new apps are that will benefit from more bandwidth on a mass market mobile platform? One that wouldn't be satisfied by a proper build out of the 3G network.

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Operator margins

When 3G was auctioned there was significant MTR revenue.

It was divisive of the European governments to sell spectrum and then undermine the business model which supported it,.

It's no wonder the operators were more cautious this time.

Simon

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Anonymous Coward

What BT will really do?

I'm not convinced that BT will be looking to roll out any kind of MOBILE service at all, especially not a femto & national roaming one.

The amount of spectrum they've bought seems like a hell of a lot just to offer femto's you only really need one channel (20Mhz max) to offer femto coverage as the cells are so small they don't overlap, plus BT would still have to invest in a mobile core network HSS's etc. and then pay for the national roaming deal, far easier to stick to being an MVNO.

My guess is that they are looking at this spectrum for rolling out fixed wireless broadband in areas of the country that don't make sense for Fibre, 2.6Ghz doesn't work well for in building and therefore you need A LOT of cells to give decent mobility, however stick a tower up on the edge of a village (perhaps on one of those nice telephone exchanges you have) then put an fixed antenna on the outside of each persons house that wants broadband and its much cheaper than a crew of men digging up the roads everywhere!

The unpaired spectrum lends itself quite nicely here, use the paired bit for your regular internet access all 2 way stuff like uploading to you tube & skype then that big chunk of unpaired spectrum gives you plenty of capacity to push high bandwidth stuff down to the users like IPTV. Also far easier to get some equipment to use the unpaired spectrum if you're just buying one type of 'home hub' from an OEM in blocks of 100,000 than trying to convince apple to put it in the iPhone 6|7|8 whatever.

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MJI
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Re: What BT will really do?

Or for BT Vision?

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Anonymous Coward

Re: What BT will really do?

Why put an antenna on the exchange? You'd get better coverage and make frequencies re-usable several times in a given exchange area if you put antennas on poles next to the broadband / FTTC cabinets.

Where multiple houses are clustered together you can use G.Fast to deliver 500Mbps over copper from the distribution point, and then use 4G to reach individual houses or those further from the cabinet, filling in the gaps.

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WTF?

O2 Coverage Obligations

O2 is obliged to provide a mobile broadband service for indoor reception to at least 98% of the UK population (expected to cover at least 99% when outdoors) and at least 95% of the population of each of the UK nations England, Northern Ireland, Scotland and Wales – by the end of 2017 at the latest.

They can barley meet 3G coverage obligations without Ofcom being on their case! Plus they have the least spectrum so may suffer congestion issues unless they are careful with how they plan their coverage.

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2G & 3G coverage

Ofcom are also consulting about variation of existing licences to allow all the existing bands to be changed from 2G or 3G to 4G. Responses are due by end of March. EE has of course already been approved to launch their 4G at 1800 MHz.

This presumably will mean that 2G and 3G coverage will suffer as capacity is shifted to 4G.

That is not a problem if you shell out for a 4G phone. It may be if you want to keep an old phone going.

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O2

Had another thought about O2's capacity.. perhaps with their coverage obligation they expect to have many more masts (perhaps to ensure no building is too far away from one). As it follows that each mast will cover fewer users, this allows them to go with less spectrum. They'll spend the same, just the spending scales are tipped in the direction of O2's infrastructure, away from the OFCOM auction.

Or they're just flat broke and hoping to cheap it out all the way.

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Re: O2

Ofcom are changing the [3G] coverage obligation. From June 2013, 90% of the population with 90% probability of at least 768kbps outdoors in a lightly loaded cell. In order to meet this new 90% coverage obligation, the licensees can use any spectrum available to them.

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Still too much!

Dosh paid is still too much - I'd guess at least £2.3 billion more than it should be.

A public resource should be made available to the public at no cost to the public.

This daft taxation-by-proxy is plain daft, limits uptake of new technology, ...

As an aside, promoting new technology as a driver to growth seems far better than, for example UK, using domestic property market as a means of driving the economy.

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Did Ofcom shoot the govt in the foot?

By allowing EE to proceed with a 4G offering, did the dismal take up by us consumers influence the apparent lack of enthusiasm by bidders?

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