Trade Resources Industry Views Ofcom's Auction of The 4G Communications Spectrum Is to Be Investigated

Ofcom's Auction of The 4G Communications Spectrum Is to Be Investigated

Ofcom's auction of the 4G communications spectrum is to be investigated by the National Audit Office, amid claims that the process did not generate the intended revenue.

The auction, carried out in June 2012, raised 2.3bn as mobile phone carriers bid to acquire portions of the UK's high speed data spectrum that had previously been occupied only by Everything Everywhere.

Further reading

BT and Vodafone stump up millions more for spectrum licences Ofcom raises 2.3bn in 4G spectrum auction Vodafone fears 4G auction delay after Three buys spectrum from EE

But the Treasury forecast that a total of 3.5bn would be raised, while estimating a possible maximum of 6.3bn.

"I intend to conduct a value-for-money study of Ofcom's recent auction of 4G spectrum," the National Audit Office's auditor general, Amyas Morse, told Helen Goodman, shadow minister for media and communications.

Goodman had already complained that the government had failed to achieve value on the project, and encouraged "serious questions" to be asked as to why the "Conservative-led government ended up 1bn short of the estimate George Osborne had provided just months earlier".

One element of criticism of the bidding process was the "combinatorial clock" method used. A multiple-round auction process, the auction involved bidding across certain packages of spectrum availability, the prices of which react to popularity among bidders.

A common criticism of the process is that companies can drive up the prices of the bigger, more expensive packages that they do not sincerely want to win.

The enquiry does not have the power to force a repeat of the auction on its own, but its findings can go to the House of Commons, which can subsequently demand a response from the government.

The results of the auction saw Everything Everywhere reduce its control of the wireless spectrum by just three per cent from 39 per cent to 36 per cent, while Vodafone walked away with 28 per cent, O2 with 15 per cent, Three with 12 per cent and BT with nine per cent.

Reacting to the news of the audit, Ofcom continues to declare the 4G auction "a success, which will deliver the maximum benefit to UK citizens and consumers".

Source: http://www.computing.co.uk/ctg/news/2261682/4g-spectrum-auction-to-be-investigated-by-national-audit-office#comment_form
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4G Spectrum Auction to Be Investigated by National Audit Office