Waiting for 4G in the UK - Will Ofcom's Slow and Steady Pace Win the Race?

The United Kingdom once had a wireless advantage…though Japan and South Korea had arguably better networks; the UK certainly was more advanced than North America and other geographic locations. Times have changed. The UK’s telecommunications regulating body – Ofcom – has been moving at its own seemingly very unhurried pace to deliver 4G services to UK consumers.

Most recently, Ofcom has been in the process of managing – through a firm grip - two key issues: when the auctions for 4G spectrum would take place, and how many telcos would be participating. Ofcom has some specific goals in mind here.

First, Ofcom has set a timeframe of early 2013 (though no specific date yet) for the actual auctions to take place. Second, it has determined that it specifically wants four operators to own the 4G spectrum, and has moved to reserve it specifically for the carriers it believes need to participate. The only question is that it isn’t yet clear who the fourth carrier will be – apparently Ofcom is “hoping” for a fourth legitimate carrier to materialize. If a fourth operator doesn’t appear, it is not yet clear what Ofcom might do next year. We do not see yet another postponement of the auction as a viable option – regardless of the competitive differences and benefits four vs. three wireless carriers might deliver.

Ovum analyst Matthew Howett, Practice Leader, Regulation and Policy at Ovum, notes in a research report, that 80 percent more spectrum will be available in the upcoming 4G auction than during the 3G licensing of 2000. However, according to Howett, while the 3G auction famously raised £22.5B (or $34.88B at today’s conversion rates), this time it’s much more likely to generate only a fraction of that amount given both the use of spectrum caps (which limit how much each spectrum one operator can obtain), and the realization from the industry that revenue isn’t going to be there yet to support such large outlays.

However, it is clear that there is already an insatiable appetite for both high speed wireless data - and the full range of services that comes with it - from consumers in the UK, and 4G is the only means to support that demand – as well as to monetize it. Both Ofcom and the four carriers that will participate will go through the auction process with the expectation that consumers will finally gain access either at the tail end of 2013 or, more likely, very early in 2014.

The public demand for 4G will only grow – any further delays will begin to lead to outcries for the operators to deliver. Ofcom may be running a slow race, but it absolutely needs to get 4G across the finish line next year.

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