Ofcom plans sell off of 2G space

Ofcom is planning an auction of its 900MHz radio spectrum, currently in use for today's 2G mobile phone networks - as part of a process of opening up this spectrum for faster data.

According to a consultation, the UK's regulator is likely to take back some 900MHz spectrum from Vodafone and O2, and auction it in 2009. This would allow three operators, to build cheap, effective national 3G networks, needing about 10,000 fewer base stations than current ones, since 900MHz is a lower frequency, with better range and penetration into buildings than any currently available for 3G or WiMax.

The whole 900- and 1800-MHZ ranges, which have been exclusively for 2G mobile networks for 20 years, since the GSM Directive of 1987, will be "re-farmed," or opened up to any technology, under a new European Decision. However, there's unlikely to be a quick shift over to any newer technologies, given the 70 million active mobile accounts in the UK.

O2 and Vodafone were given the 900 MHz band for free in 1985, while the 1800 MHz band is used by all the current licence holders, O2, Vodafone, T-Mobile and Orange. Apart from the section Ofcom plans to take back, the rest would remain in the current licence holders' hands, under the option that Ofcom proposes in its consultation.

During 2008, the 1800 spectrum will be open to any technology, and operators will be able to trade it with other operators, under a process which Ofcom expects will add about £6 billion to the UK's economy. The remainder of the 900 MHz spectrum will be opened to other technologies at the same time as the 900 MHz auction.

No-one is expecting a repeat of the £22.5bn windfall that the government got for its 3G auction of spectrum around 2100 MHZ in 2000, but this time round, the spectrum is much better, and the winners should get revenue from it more quickly, since 3G handsets and applications are already available, and both mobile communications and the Internet are in much more widespread use.