Chipmaker Qualcomm has sold its UK spectrum rights to Vodafone and CK Hutchison Holdings for $313.8 million.
This is not bad really because the company paid only £8.3 million at auction in 2008 so it certainly got more than its money back.
The deal is subject to approval by communications regulator Ofcom.
Qualcomm in June announced that it was putting a chunk of spectrum up for sale in Britain, which could appeal to mobile operators grappling with demand for Internet access.
The chipmaker said in July it might break itself up as it delivered its third profit warning this year and said it planned to slash jobs and spending in a competitive environment.
When Qualcomm bought the spectrum it was believed to be a way to roll out its MediaFLO, the mobile TV broadcast system, a rival to DVB-H. But the mobile TV standards proved to be dismal failures Qualcomm didn’t have any use for the substantial chunk of spectrum.
The chance of the US leading the world when it comes to hi-spec mobile networks were put on ice by its regulatory authority.
The FCC has delayed the incentive auction and has prompted the agency to push the spectrum swap until 2016 thanks to a legal challenge.
The National Association of Broadcasters (NAB) started the court case because the incentive auction could hurt TV stations that choose not to participate in the auction.
Final briefs in the case are not due until late January 2015, meaning a decision is probably not likely until mid-2015.
An FCC spokesman said it was confident it wouldl prevail in court, but given the reality of that schedule, the complexity of designing and implementing the auction, and the need for all auction participants to have certainty well in advance of the auction, a delay is necessary.
The spectrum auction will allow broadcasters to sell their unused spectrum to mobile carriers and get a cut of the purchase price. NAB has been cautiously supportive of the move, but the group’s lawsuit says that the FCC is not providing adequate protection for broadcasters who decline to participate.
NAB said it was not its narrowly focused lawsuit which was the cause for delay. NAB Executive Vice President of Communications Dennis Wharton said the NAB has said repeatedly, it is more important to get the auction done right than right now. Given its complexity, there is good reason Congress gave the FCC 10 years to complete the proceeding.
A complaint from Labour MP Helen Goodman, shadow minister for media and communications, looks like it will lead to an investigation from the UK’s National Audit Office about the “value-for-money” of the 4G auction.
A letter seen by the Guardian from NAO’s auditor general Amyas Morse to Labour MP Helen Goodman confirmed that the Office intends to “conduct a value-for-money study of Ofcom’s recent auction of 4G spectrum”. The NAO is apparently getting the investigation ready, prompted by Goodman’s complaints, which raised Ofcom chief exec Ed Richards’ concerns that the Coalition hadn’t focused on maximising auction revenues.
Goodman told Morse that “by not making maximising the auction’s revenues an objective for Ofcom, the government has failed to get value for money on this project”.
The Treasury forecasted £3.5 billion from the auction, a small amount next to 200’s 3G auction which raised £22.5 billion.
Auction bidders themselves have stated the auction had been poorly designed – as Ofcom didn’t raise the amount the government was looking for, or make sure spectrum went to everybody who wanted it, an anonymous bidder told the Guardian.
The NAO will not be able to force another auction, however, a report will go to the Commons public accounts committee – which can grill chancellor George Osborne for a response.
However, Ofcom claimed the auction was a success which “will deliver the maximum benefit to UK citizens and consumers in line with Ofcom’s statutory duties”. The body insisted the auction will create satisfactory competition which will lead to further investment. “The auction was designed to promote competition and ensure coverage, rather than to raise money,” an Ofcom spokesperson said.