Ofcom's spectrum auction this summer, is the biggest the regulator has ever carried out. It will kick off the next revolution in mobile voice and data - to so-called 4G services. But it might not be quite as hot as some people expect.
There is 205MHz of prime spectrum around 2.6GHz available in Ofcom's auction, and it is wanted by 3G operators for the move to their 4G standard, known as LTE (long term evolution). It is also wanted by operators who are planning to roll out mobile WiMax services, and who currently have very little licensed spectrum to play in.
Ofcom stays neutral
Ofcom isn't backing any one horse. The band was originally earmarked for expansion to 3G services, but, despite arguments from operators, the regulator has consulted and stuck with its current policy of making all auctions technology neutral, and tradable. So anyone who buys this spectrum can decide what to do with it - and if they have no current use for it, can sell it on for whatever its market value turns out to be.
Ofcom's technology-neutral stance has some limitations, but it looks like mobile WiMax can innovate around these. Part of the spectrum will be allocated to frequency division duplex (FDD) technologies, which have a separate frequency for up and down links. A smaller area, will be for TDD (time division duplex) tecnnologies. LTE has been defined to be FDD, but WiMax will very likely have an FDD version.
Likely bidders line up
Likely bidders obviously include all current mobile operators, who will be looking to add LTE to their offerings. There will also be an unknown number of operators bidding for spectrum for mobile WiMax.
It's very likely that WiMax bidders will include BT. Meanwhile, Nortel has joined with operator Urban Wimax, to promote Wimax in the Mobile WiMax Acceleration Group. Pipex currently has a 3.5GHz licence for fixed Wimax, which it is using to slowly roll out services; it may be part of a bid for mobile WiMax in the 2.6GHz auction.
LTE wins out?
Wimax vendors and potential operators have argued strongly that Wimax is well-placed to be the upgrade for 3G networks. Although 3G networks carry voice as well as data, the move to 4G will coincide with a move to digital voice, so the networks need a data-oriented upgrade. Wimax is designed for data, and may be better for operators than LTE they say.
Despite this, WiMax has had a disappointing roll-out in high-profile cases such as Sprint-Nextel in the US, squandering the lead it appeared to have over LTE. Meanwhile, early trials of LTE have been positive - though, note, we are comparing a roll-out with a trial here.
"It is quite clear what the majority of operators will go for," says Chris Larmour, chief marketing officer of network optimisation company Actix. "LTE will be dominant. Mobile Wimax will have a hard time convincing operators, because it comes from an IT background, while LTE comes from traditional vendors
In its favour, Wimax uses the same underlying signal technology as LTE, called OFDMA, and it has been suggested that it may be cheaper to buy Wimax equipment, as patent fees could be lower, but the difference seems to be lower now than predicted and, in any case, only affects a small part of the cost of building a cell tower: "The main cost is in metals and concrete," says Larmour.