UK 4G auction raises £2.34bn, contracts awarded

(BBC) Telecoms regulator Ofcom has raised £2.34bn from its auction of 4G mobile spectrum, less than expected.

The Office for Budget Responsibility (OBR) had forecast that the auction would raise £3.5bn for the Treasury.

The winning bidders are Everything Everywhere; Hutchison 3G UK; Niche Spectrum Ventures, a BT subsidiary; Telefonica (O2); and Vodafone.

4G mobile broadband should provide smartphone and tablet computer users with superfast download speeds.

The auction netted far less than the £22bn raised from the 3G auction in 2000.

Ed Richards, Ofcom chief executive, told the BBC that the figure was lower because "we are in very, very different times", but he insisted that maximising the size of the auction was not the objective it was set by the government.

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"What we were trying to do was ensure that a valuable economic resource was brought into productive commercial use," he said.

The shortfall has important political implications, because Chancellor George Osborne included £3.5bn worth of 4G auction receipts in his Autumn Statement in December.

BBC political producer Andrew Fagg says this allowed Mr Osborne to play the "trump card" of predicting that the UK's budget deficit would fall in 2012-13.

What is so great about 4G?

• 4G promises superfast mobile broadband with speeds of up to 100Mbps - roughly five to ten times faster than current 3G networks.
• This should mean you'll be able to watch TV, videos and movies on your smartphone or tablet computer without any annoying glitches in the picture quality.
• You'll also be able to make HD video calls more easily and upload photos and videos to social networking sites in a flash.
• People in rural areas with poor mobile connectivity should benefit from 4G's wider coverage, giving them mobile broadband for the first time.
• But the jury is out on how much of a quality difference we will actually notice, especially if those "up to" speeds are rarely achieved, particularly in peak periods of high usage.
• The jury is also out on how necessary 4G actually is - and whether it will be worth paying more for - given the proliferation of wi-fi networks at home, work and in high-street outlets.