"which makes one wonder why O2 wants any of the old analogue TV spectrum at all"
Breakneck speeds, low latency and excellent coverage with less base statiosn would be the obvious answer.
London is switching off analogue TV today, so O2 is crowing about how marvellously its 4G trials have gone, despite the two things being at opposite ends of the spectrum. O2's LTE trial involves 25 base stations, a couple down in Docklands to cover the O2 Arena (aka The Millennium Dome) and the rest covering most of the West …
Simple answer: 2.6GHz is good for urban areas where you have a lot of users in close proximity. 800MHz is good for rural areas where you want few base stations to cover a large swath of land (rolling out a 2.6GHz network nationally needs a lot more base stations).
Do Ofcom really need to auction these spectrum bands into chucks for specific operators?
It seems a very old fashioned approach. Surely with packet switching & spread spectrum technologies where they are the entire band could be used for multiple operators at the same time? It would also create a very low barrier to entry for new entrants...