Ofcom has announced that bidding is now under way on its 4G spectrum auction.
Seven companies, including the UK’s top four mobile providers, will bid to secure new airwaves suitable for superfast mobile broadband services.
Vodafone, Telefonica O2, Everything Everywhere, 3 owner Hutchinson 3G UK, BT subsidiary Niche Spectrum Ventures, backhaul specialist MLL Telecom and HKT (UK) Company are the confirmed bidders.
The interested parties will compete for 28 lots of spectrum in two separate bands – 800MHz and 2.6GHz. The two bands will amount to 250MHz of additional mobile spectrum, compared to 333MHz currently in use.
“This combination of low and high frequency spectrum creates the potential for 4G mobile broadband services to be widely available across the UK, while offering capacity to cope with significant demand in urban centres,” said Ofcom in a statement.
Spectrum will be sold through a “combinatorial clock” auction in which bidders attempt to acquire a combination of spectrum lots from across both 800MHz and 2.6GHz bands by telling Ofcom what they are willing to pay for specific combinations.
At the start of each round, the governing body sets a price for each lot and the bidder specifies which combinations they are interested in. Price will be increased for the most in-demand lots as the rounds go on until supply meets demand.
A further round of bidding will see unsold lots go under the hammer, with the winner bidder paying the smallest amount they would have needed to bid in order to win.
Ofcom has set a reserve price of 1.36 billion for the spectrum, but the UK government is targeting a windfall of 3.5 billion.