News that the UK regulator, Ofcom, proposes to follow the example of other European countries such as France, and reserve the 790-862MHz spectrum band for mobile broadband, appears to represent a departure from the regulator’s previous policies towards spectrum allocation.

As recently as June 2008, Ofcom had confirmed its proposals “to take a market-led approach to awarding the digital dividend, giving users the flexibility to decide its use”; and “not to intervene to reserve the spectrum for any particular use, and to award the spectrum by auction.”

In line with this policy, the regulator had resisted European moves to harmonise usage of any particular band across Europe, notably a suggestion to allocate a frequency band for pan-European mobile TV services.

Thus it was that two lots of UHF channels were due to be auctioned off by Ofcom this summer to the highest bidder: 31-40 and 63-68.

According to the latest proposals, however, clearing 790-862MHz would extend the upper of these two bands downwards to include 61-62 (originally only the interleaved spectrum in these frequencies was due to be auctioned off - i.e. the ‘white spaces’ dotted around the country at regional level which remain unused for DTT), and upwards to include 69 (which was to be allocated to Programme Making and Special Events - i.e. wireless microphone use - through a beauty contest).

Among the arguments Ofcom put forward in favour of that move this week is that: “This will allow new wireless services, particularly mobile broadband, to be launched here and across Europe.”

Ofcom goes on to say that it estimates the net benefits of the move, “conservatively, at £2-3 billion in net present value (NPV). A major reason why these benefits are so large is that, if we make the same spectrum available as other countries, better mobile broadband services can be provided to consumers at lower cost.”

Ofcom reiterated this week that this doesn’t represent a departure from a market-led, technology-neutral approach. On the other hand, it does seems to be assuming that mobile broadband services will occupy these frequencies. But how is it able to make that assumption if it believes spectrum to be technology-neutral? Presumably, none of the claimed benefit would be obtained if winning UK bidders for the upper sub-band turned out to want it for TV. Then the costs of the harmonisation (which Ofcom estimates at between £90-200m) would have been wasted.

Clearly, then, Ofcom can no longer really believe in technology neutrality. It is now signalling that given the trend by other European countries to harmonise this band, in effect the spectrum has become much more suitable for mobile broadband services than anything else.

One of the intriguing consequences of the move could be actually to lessen the take from the auction process. Given the implied constraints on the spectrum’s most effective use, it is entirely possible that fewer bidders might now enter the race. Usually, less competition would be assumed to entail a lower price - although if a reduced band of bidders take heed of Ofcom’s suggestion that better mobile broadband services could be offered at lower cost, they could conceivably all decide to risk more.

Unfortunately, we are going to have to wait until 2010 to find out the result. As part of this week’s announcement, Ofcom confirmed, as most of the industry was expecting, that the auctions were now not going to take place this summer, as originally planned, but next year.