Vodafone Share News (VOD)

By Paul Sandle LONDON, Dec 20 (Reuters) - Seven companies were named onThursday as bidders for the superfast 4G mobile broadband radiofrequencies to be auctioned off in Britain next month byindustry regulator Ofcom. Existing mobile network operators EE, Vodafone, O2owner Telefonica and Hutchison, which isbehind Three, will be vying with O2's former owner BT,managed networks firm MLL Telecom and Hong Kong's PCCW Limited, the regulator said. EE, the UK's biggest mobile network operator, is a jointventure between France Telecom and Deutsche Telekom and has already launched 4G services in some majorBritish cities by reallocating its existing airwaves. Ofcom calculated that giving EE a head start this year wouldput an end to the networks seeking to delay the auction furtherin a squabble over who should be offered what spectrum andtherefore give Britain a chance of catching up with the UnitedStates and other European countries in the deployment ofsuperfast mobile networks. "I think you'll find the UK's position in relative termstransformed very fast," said Ofcom's chief executive EdRichards. The auction has been designed, he said, to deliver maximumbenefit to consumers by getting mobile broadband networksbuilt, which are capable of operating at five to seven times thespeeds of 3G, while ensuring that operators pay the right amountof cash rather than the most possible to the government. The sell-off of 3G airwaves in 2000 raised 22.5 billionpounds ($37 billion) for state coffers, but left the operatorssaddled with debt, prompting complaints that they could notafford to invest in all the infrastructure needed to roll outnew services. "The backdrop to this is utterly different," Richards said."When the 3G auction was done you were still at the height ofthe dotcom boom. We are in the so-called age of austerity now." Earlier this month the government budgeted for a 3.5billion-pound windfall from the auction next year, but Richardssaid that prediction had not come from Ofcom. "The real economic benefit here is in the benefit toconsumers and the economy from the deployment of these highlyvaluable services," he said. "If we were to calculate theestimated economic benefit of that it would massively dwarf therevenues from the auction." Analysts at Espirito Santo said they were not surprised bythe bidders, and they did not expect an overheated auction aswas seen in the Netherlands, where 3.8 billion euros were raisedin a 4G spectrum sale last week. They noted that fixed line operator BT had previously saidit only wanted to pick up niche amounts of spectrum to supportits existing strategy and the other two potential new entrantswere also likely to bid on a speculative or opportunistic basis. "The way the auction is designed ... ought to allow theincumbent mobile network operators and niche players to pick upwhat they need without going head to head," they said. "We remain comfortable with the 1 billion pounds ... we havepencilled in for each licence into our Vodafone, FranceTelecom/Deutsche Telekom and Telefonica models." MLL Telecom said it was bidding to complement its existingspectrum allocation, and to increase the infrastructure it hasavailable for its mobile operator customers. "We are not lookingto supply a consumer or enterprise service," chief commercialofficer Karl Edwards said. SPECTRUM COMBINATIONS Ofcom said a mix of 28 blocks of bandwidth were up for grabsthis time, whereas only five licences were available for 3G. Operators need to use a combination of different blocks toprovide superfast coverage across the country, typically using800 megahertz radio frequencies to serve rural areas andhigh-capacity 2.6 gigahertz frequencies for urban areas. Thelower-frequency 800 MHz band was freed up when analogueterrestrial TV was switched off. One portfolio of spectrum has been reserved for a fourthnational operator, whether Three, which is the smallest operatortoday, or another, Richards said.