By Richard Johnstone | 12 March 2014
The government’s £2.4bn auction of 4G mobile phone licences last February was within the range of the money raised in other European countries, despite failing to meet a Treasury target, the National Audit Office has said.
Analysing the lessons from the sale of the radio spectrum, auditors said that it was too early to conclude if the auction – which made allocations to five bidders – was economically efficient, as not enough time had passed to assess services.
However, the NAO concluded that Ofcom, which ran the sale for the Department for Culture, Media and Sport, had achieved the objective of maintaining a competitive market with a number of providers.
Although Ofcom had no set objective to raise any particular level of funds, the NAO said the proceeds were within the range of other countries.
According to figures in the 4G radio spectrum auction: lessons learned report, the UK sale was the median average of eight auctions across Europe, when adjusted for population size. The UK raised £2.55m per megahertz of spectrum, compared to the Netherlands, which raised £8.93m at the top of the list, and £1.63m raised by Portugal, the least of the eight countries.
Ahead of the auction, the Treasury had anticipated that around £3.5bn would be raised.
The five bidders which won spectrum in the auction were the existing national mobile operators (EE, Three, O2 and Vodafone), as well as BT. Ofcom has estimated that the economic benefits from the sale for consumers will be worth around £20bn.
Responding to the report, an Ofcom spokesman said: ‘We are pleased the NAO recognises our auction achieved its objective of promoting competition in the 4G market.
‘Consumers are now enjoying the benefits, with coverage rising fast and operators competing on price. 4G take-up in the UK is among the fastest in the world, with around four million people already using the technology.’
