Vodafone and O2 hit by Government's mobile broadband shake-up plans

UK may make radical changes to mobile broadband spectrum in an attempt to offer fast internet connectivity to all corners of the country.

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UK has unveiled plans to make radical changes to mobile broadband spectrum in an attempt to offer fast internet connectivity to all corners of the country.

But Vodafone and O2 may lost out on gaining extra spectrum share, following proposals published by Government advisor Kip Meek that would see the two mobile companies capped from buying more spectrum in upcoming auctions.

Under the new plans, the UK's five mobile broadband operators will have their 3G licences extended indefinitely, providing they undertake to offer 3G to the populace at large. The plans will cap ownership of the digital radio spectrum among mobile phone companies, aiming to settle a long-running dispute and fulfil the government's target of providing universal broadband.

When analogue TV is switched off in 2012, freed up spectrum will be sold off to be used to provide mobile broadband coverage for 99 percent of the UK population.

Meek's report claims that this method could provide 4Mbps service to the vast majority of the country - this is twice as fast as Lord Carter promised in his January Digital Britain report. The UK mobile phone spectrum is split into three blocks: 2G, 900MHz and 1800Mhz, and 3G, 2.1GHz.

But the two biggest mobile operators - Vodafone and O2 - could be excluded from buying the additional spectrum created in 2012.

The report proposes capping the amount of spectrum any one company can hold, although it stops short of suggesting that Vodafone and O2 give up any of their existing capacity.

Meek also suggests a radical change to the way Ofcom views the spectrum, allowing mobile operators to use any part of the airwaves for broadband. Thus O2, Vodafone, Orange and T-Mobile, will also be able to use their current 2G networks to run 3G services.

In response to the report O2 released a statement in which chief executive Ronan Dunne said: "This report is a significant step forward in making Digital Britain a reality and is good news for UK PLC. Spectrum allocation is a complex question."

"Throughout the process we've looked for a solution that delivers the Government's vision for Digital Britain, while ensuring we can continue to deliver a great customer experience.

"We are pleased with the progress of the discussions and that there can now be a public debate on these proposals."

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