4G auction raises £1bn less than expected

£3.5bn has been pre-spent; just £2.35bn will be arriving in the coffers.

The auction for the 4G mobile communications spectrum has raised just £2.34bn, over £1bn short of expectations. Since the money has been effectively pre-spent by the chancellor in the most recent budget, the discrepancy will be extremely problematic for the Government's budget plans.

The £2.34bn will buy five companies — EE, 3, O2, Vodafone and a new operator "Niche Spectrum Ventures Ltd" (owned by BT)  — access to the 4G spectrum. This will allow those operators to run mobile broadband throughout much of the UK, and is partly enabled by the switch-off of analogue TV, which freed up part of the 4G spectrum for alternative use.

While the Chancellor was apparently greedy in assuming that Britain could earn £3.5bn from the sale of the spectrum, the last auction like this, held under Gordon Brown's treasury, raised £22bn. But the 3G sale was markedly different from the 4G one. Held in the midst of the dot-com boom, the hope for revenue from the new technology was inflated beyond the realms of possibility, and a concerted PR campaign on the part of the government running for three years beforehand ensured that hype reached fever pitch.

Take, for example, Webvan. The company was founded with the promise of same-day delivery in the San Francisco area on a number of basic products — it was, basically, Ocado. But unlike Ocado, it had a market cap post-IPO of $8bn. Ocado, undoubtedly better than Webvan in every aspect, but ten years later, went for a quarter of that. In other words: the 2010s are not the 2000s when it comes to making big money from technology.

The 3G auction was also successful, however, in managing expectations. The general assumption was that "licences would sell for a total of about £2-4 billion", according to Ken Binmore and Paul Klemperer, authors of the definitive look at the auction. If this Chancellor has made one mistake, it was overinflating expectations — and if he's made two, it was writing those overinflated expectations into the nation's budget. His hubris will sting this morning.

4G iPads. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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The Republican nightmare shows no sign of ending

The Republican establishment is no closer to identifying the candidate who can stop Trump or Cruz, while Hilary Clinton finds herself in a similar position to Barack Obama eight years ago.

After being cruelly denied by the people of Iowa, we were finally treated to a Donald Trump victory speech in New Hampshire last night. While Trump’s win will come as a “yuge” shock to anyone waking up from a yearlong nap, it was very much in line with more recent expectations. More surprising is John Kasich’s second place finish ahead of the tightly packed trio of Ted Cruz, Jeb Bush and Marco Rubio.

Rubio’s underperforming his polling average by about four points at time of writing (with 89 per cent of precincts reporting) – perhaps partly the natural erosion of his post-Iowa bump, perhaps also due to his mauling at the hands of Chris Christie in Saturday night’s debate. Meanwhile Ted Cruz’s 12 per cent compares favourably with past Iowa winners’ New Hampshire performances: Mike Huckabee got 11 per cent in 2008 and Rick Santorum 9 per cent in 2012, but neither came close to winning the nomination.

The result offers little help to those “establishment” Republicans who’d been planning to coalesce around whichever of Jeb Bush, Chris Christie, John Kasich and Marco Rubio emerged from New Hampshire in the best position.

Christie and Carly Fiorina are probably done. Both got less than 2 per cent in Iowa; both finished in single digits in New Hampshire after focusing heavily on the state; both are stuck at the bottom of the national polls, and neither has raised all that much money (relatively speaking). Christie is heading back to New Jersey to “take a deep breath”, “get a change of clothes” and “make a decision” tomorrow.

But who will party elites rally around to stop Trump and Cruz? Kasich, who came second in New Hampshire but is on just 3 per cent nationally? Rubio, who beat expectations in Iowa and is best of the bunch in national polls but disappointed badly tonight after a terrible debate performance? Or Bush, who’s had more than $75 million spent on him by the “Right to Rise” super PAC with just three per cent in Iowa and 11 per cent in New Hampshire to show for it? Nobody has won either party’s nomination in the modern primary era without a top-two finish in New Hampshire – does either Rubio or Bush really seem like the candidate to break that trend?

Jeb does have plenty of money and organisation, and is guaranteed some extra support from one prominent establishment Republican in South Carolina: his brother. George W has recorded an ad for the Jeb-supporting “Right to Rise” PAC, calling his brother “a leader who will keep our country safe”, which is already running on South Carolina TV (and which ran in New Hampshire during the Super Bowl). He will also join his brother on the campaign trail in the run up to the primary. Bush 43 left office very unpopular and remains the most disliked former President, but he is very popular with Republicans. A Bloomberg/Selzer poll in November found that 77 per cent of them have a favourable opinion of him, making him far more popular than any of this year’s candidates. (Jeb calls his brother “the most popular Republican alive”, which is a bit of a stretch. Nancy Reagan? Clint Eastwood?)

Trump leads convincingly from Cruz in the most recent polls in both South Carolina and Nevada, but there haven’t been any polls from either state since the Iowa caucus. Neither state is as friendly territory for “establishment” candidates as New Hampshire: South Carolina’s electorate is much more evangelical, and Nevada’s much more conservative. Newt Gingrich won South Carolina handily in 2012 and Huckabee came a close second in 2008. Cruz and Trump are doing best with evangelicals and very conservative voters this time around. Thanks to the state’s winner-take-all rules, whoever prevails in South Carolina will get the small ego boost of going into Super Tuesday with the most delegates.

On the Democratic side, Bernie Sanders secured a big win over Hillary Clinton (60 per cent to 38 per cent with 90 per cent of precincts reporting). What seemed incredibly unlikely a year ago has been almost certain for the past week or so. As he heads south and west, though, Sanders faces a new challenge: winning over African American voters.

Just two per cent of those who voted in the two Democratic contests so far have been black; in the next ones that number will be a lot higher. (In 2008, it was 15 per cent in Nevada and 55 per cent in South Carolina). In national polls, Clinton holds a 58-point lead among African American voters compared to her six-point lead with white voters, and she’s 31 points ahead overall in FiveThirtyEight’s average of South Carolina polls (all taken pre-Iowa).

Ironically, Clinton now finds herself in a similar position to the one Barack Obama was in when battling her for the nomination in 2008: heading to South Carolina, having won Iowa but lost New Hampshire, hoping African American voters will help her win big and regain the momentum as we head towards Super Tuesday.