Ofcom to flog more spectrum licences

Ofcom is planning to auction off another slice of the UK's radio spectrum.

The communications regulator announced last week that it will award between five and 10 licences to operate in the 1781.7MHz-1785MHz and 1876.7MHz-1880MHz spectrum bands. The licences will be awarded through an auction in which interested parties can place a single sealed bid, which will take place later this year or in 2006.

These spectrum bands sit at the edge of the band used for GSM mobile services today. Ofcom has said the licences will only allow low-power services, so they could be used to operate private GSM networks in certain locations such as office buildings or campuses. Such networks could be cheaper than commercial mobile networks and - unlike similar ideas such as BT's Fusion - will work with standard GSM handsets without the need for Bluetooth, Wi-Fi or extra software features.

A start-up called Coffee Telecom has already expressed interest in the auction. It plans to operate mobile services for the cost of a fixed-line call.

Martin Wren-Hilton, chief executive of Coffee Telecom, told Reuters: "We will be offering low-cost mobile telephony in the UK in what we call 'coffee zones'."

"Locations could be either at work or in places such as Costa Coffee, where you can make calls over the Coffee network and be charged at landline rates."

If it wins a licence, Coffee Telecom will attempt to persuade companies it can cut their mobile phone bill.

According to information on its website, firms who signed up would be issued with Coffee Telecom SIM cards. These would turn the mobile into an extension of the company's internal phone system, allowing cut-priced calls at Coffee Telecom sites, including their own office.

When out of range of the Coffee Telecom service, mobile calls would be routed over "Coffee's outdoor network partner".

Ofcom is committed to auctions as the best method of allocating radio spectrum. Some in the industry remain to be convinced, following the 3G auctions of 2000 where mobile operators overbid for the licences to the tune of £22.5bn. The failure of an auction of 28GHz licences to attract much interest in 2002 has also been cited as evidence that auctions don't always work.

Graeme Wearden writes for ZDNet UK