Ofcom flags up sale of 4G mobile phone licences

The auction of fourth-generation mobile phone licences was today kick-started by regulator Ofcom.

Rapidly increasing demand for mobile internet from smart phones and tablets will be addressed by selling bandwidth freed up by the switch from analogue to digital TV.

The sell-off is unlikely to provide the kind of boost to George Osborne's attempts to cut public borrowing enjoyed by Gordon Brown when he was Chancellor.

The auction of 3G licences in 2000 raised more than £22 billion for the Exchequer.

The 4G sale, which will happen early next year, is unlikely to raise more than £2 billion according to analysts, even though it covers 80% more spectrum that the original sell-off.

Ofcom made it clear today that it will run the auction to ensure that all four UK networks - Everything Everywhere, O2, Vodafone and 3 - can grab a piece of the action.

There had been fears that the smallest operator, 3, could be squeezed out by its larger rivals if the auction was completely open.

Ofcom also wants commitments that mobile broadband will cover 95% of the population.

Ed Richards, chief executive of Ofcom, said: "The auction is not only critical to the future of the UK mobile telecommunications market, it is also of significant importance to the wider economy.

"Our role as the independent regulator is to award this spectrum in a way that secures the best use of the spectrum for the benefit of citizens and consumers in the UK.

"That is why we are proposing to design the auction in a way that not only encourages investment but also promotes competition and delivers wide coverage of services."