4G Auction: How will it work?

Licenses for 4G spectrums will be auctioned to different network providers next month.

The Chief executive of Ofcom, Ed Richards, insists the purpose of the auction is to provide the best possible service to customers. However, many argue that the auction is money driven, with the Government hoping to make a large profit.

No figures have been released to indicate how much will be raised, however earlier this year, the Office of Budget responsibility estimated the exchequer would gain £3.5bn

Seven firms had earlier been confirmed by paying the £100,000 deposit required to participate in the auction. Ofcom have now revealed the bidders: EE, O2, Vodaphone, HKT (a subsidiary of mobile operator PCCW ), 3, MLL Telecom and BT.

So what does 4G have to offer?
Customers can expect mobile internet access 5 times faster than 3G.

How will the auction work?
There will be a secret online auction, similar to eBay. Bidders will stake how much of the spectrum they wish to buy and how much they are willing to pay. The winner will pay the lowest price that is greater than the rest of the bids. A second round of bidding will allow more chance to win further spectrums.

What do they mean by spectrums?
These are the radio wave frequencies that are used for communication and data transmission. Different spectrums have different strengths, making some more suitable for different transmissions than others.

EE was the first to launch 4G by using has made use of old 2G – non-broadband – 1.8GHz bandwidth. However, the network’s realiability and strength has been questioned since the launch.

The digital switchover, has freed up the 800MHz radio spectrum which can now be used for 4G.

Networks will be focusing on bidding for a range of spectrums that will allow them to cover large areas and therefore reach more potential customers. Lower frequency is needed in rural areas to travel further whereas urban, densely populated areas need higher frequency waves.

It will be interesting to see just how much the network providers are willing to pay to provide good 4G coverage.

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