Media regulator Ofcom has today confirmed plans for the 4G auction, which will be 80% bigger than the multi-billion pound 3G auction in 2000.
The auction has been dogged with delays, but Ofcom has now said that it will get underway later this year, and bidding by the mobile operators for the spectrum is expected to start in early 2013.
As well as swelling the government's coffers, the sale will increase mobile broadband coverage to at least 98% of the population in villages, towns and cities, and enable the UK to benefit from 4G mobile, which can deliver much faster mobile data speeds to phones and connected devices.
Ofcom had initially hoped for the auction to get underway in the first half of this year, but that slipped back to later in 2012. The regulator now expects customers to start benefiting from 4G mobile in late 2013.
However, there has been no decision yet on a separate proposal by Everything Everywhere to introduce the service in 2012, involving reuse of its existing spectrum.
Ofcom said that it was 'minded to approve' the proposal earlier in the year, despite it being criticised by rivals operators, such as Vodafone, O2 and Three.
In a statement today, Ofcom said that its auction will offer at least two spectrum bands - the 800Mhz spectrum freed up following the digital television switchover and the higher 2.6GHz frequency that is viewed as ideal for achieving faster speeds.
Taken together, the bands add up to 250 MHz of additional mobile spectrum, compared to 333 MHz in use today.
The combination of low and high frequency spectrum also creates the possibility for 4G mobile broadband to be launched in the UK, which is viewed as vital to cope with the massive increase in usage of connected devices, such as smartphones and tablets, to access internet services on the go.
"The 4G auction has been designed to deliver the maximum possible benefit to consumers and citizens across the UK," said Ofcom chief executive Ed Richards.
"As a direct result of the measures Ofcom is introducing, consumers will be able to surf the web, stream videos and download email attachments on their mobile device from almost every home in the UK."
The watchdog said that UK consumers are expected to benefit from better services at cheaper prices as at least four national wholesalers will be competing to offer 4G mobile.
Ofcom said that the fourth wholesale operator could be Hitchinson 3G, owner of existing 3G spectrum, or "a new entrant altogether". It is likely that this operator would lease spectrum to other 4G mobile service providers.
Any parties bidding for the valuable 800Mhz spectrum will need to meet an obligation to provide a mobile broadband service for indoor reception to at least 98% of the UK population by the end of 2017.
Ofcom said that the winning bidders are expected to "start rolling out 4G networks using the auctioned spectrum from the middle of 2013, and to start offering 4G services to consumers later that year".
Separately, Everything Everywhere - the joint venture of T-Mobile and Orange in the UK - submitted an application in November 2011 to reuse its existing spectrum to deliver 4G early, potentially even this year.
Ofcom consulted on this proposal earlier this year, and the regulator intends to announce it final decision "in due course".
Rival operators have expressed concern that Everything Everywhere - the UK's largest mobile operator by customer base - could use the proposal to gain a major advantage in the 4G market, and then bog down Ofcom's auction with legal challenges.
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