LONDON -(Dow Jones)- The UK's telecommunications regulator Thursday unveiled plans to liberalize parts of the country's mobile phone radio spectrum to accelerate mobile broadband usage, and in the process generate an additional UK£6 billion (US$12 billion) for the economy.
Ofcom is proposing that two of the UK's mobile phone operators, Vodafone Group and Telefonica's O2, give up part of the radio spectrum they currently use, which it will auction to other phone companies.
02 and Vodafone were given sole rights to use the 900 megahertz frequency in 1985.
In return, Ofcom says that the two operators will be able to use the freqency - over which they currently provide voice calls and text messaging - for other services, including high-speed mobile broadband that the regulator currently restricts them from offering over the 900 MHz spectrum.
Until now, Ofcom has only allowed the 900MHz spectrum to be used for second generation, or 2G, voice and text messaging services. In lifting this restriction, the regulator will give Vodafone, O2, and other potential bidders the right to use this prime piece of radio spectrum to improve mobile reception in rural areas and inside buildings. Operators will also be able to use the spectrum to offer third generation, or 3G, data services, such as Internet browsing, and music and video downloading.
Significantly, operators can roll out 3G services in rural areas on the 900 MHz frequency much more cheaply than using existing 3G technology, as fewer radio masts are required because the 900MHz spectrum can carry signals across greater distances than the current 3G services operating at 2100 MHz that are offered by Vodafone, 02, the U.K. arms of Deutsche Telekom's T-Mobile and France Telecom's Orange, and Hutchison Whampoa's operator 3.
The European Commission in July issued a directive proposing that operators across Europe should be allowed to "refarm" the 900MHz band for other uses. EU Telecoms Commissioner Viviane Reding argued that by doing so operators will be able to cut the costs of running a wireless network by 40% over five years.
"We estimate that each existing 3G operator in the U.K. could stand to save GBP1.25 billion each in the cost of rolling out a mobile broadband network by using the 900MHz spectrum," said an Ofcom spokesman Thursday.
E-Plus, the mobile arm of Dutch KPN in Germany, has previously estimated that it could save up to EUR300 million in operating costs by running its 3G network on the 900MHz frequency. ...continued
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