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Ofcom Sets 4G Spectrum Sale Reserve Price

(c) Sky News 2012

Telecoms regulator Ofcom has set a reserve price of £1.3bn for the auction of 4G mobile phone licences to be sold at the start of next year.

It is expected to raise much more, albeit less than the 3G sale which brought in more than £22bn in 2000 when the reserve price was £500m.

The regulator has published a timetable for the auction which it claims will be the largest ever sale of mobile airwaves in the UK - offering the equivalent of three-quarters of the mobile spectrum currently in use.

That equates to around 80% more than released in the 3G sale, providing fast mobile broadband coverage to at least 98% of people across the UK.

Prospective bidders will be able to submit their applications with an initial deposit from December 11, before bidding begins in January and licences are granted in February and March.

Mobile operators are expected to launch the new 4G services, which allow much speedier downloads, in May and June.

It means smartphone and tablet users will have access to 4G - offering speeds up to five times faster than existing 3G networks - to surf the internet by the end of 2013.

Ofcom chief executive Ed Richards said: "Today marks an important shift from preparation to the delivery of the auction, which will see widespread 4G mobile services from a range of providers.

"The entire industry is now focused on the auction itself, with a shared goal of delivering new and improved mobile services for consumers."

Plans for the auction follow Ofcom's controversial decision in the summer to allow network EE, formally known as Everything Everywhere and which owns Orange and T-Mobile, to use its existing bandwidth to launch 4G services in 11 towns and cities in the UK.

Vodafone (LSE: VOD.L - news) was among competitors which argued providers should have all been able to launch 4G at the same time.

The upcoming 4G sale has also sparked a political row over how the proceeds from the auction should be distributed.

The estimated return being floated by various experts is between £3bn and £4bn.

Shadow chancellor Ed Balls has called for the windfall to be used to "kick-start the economy" by building 100,000 affordable homes to boost the housing market and construction jobs, and funding a stamp duty holiday.

Chancellor George Osborne is yet to disclose how he intends to distribute the money from the sale.

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