Ofcom confirms 5G spectrum auction plans

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UK comms regulator Ofcom has confirmed plans to auction spectrum to help improve mobile broadband and support the rollout of 5G, with bidding set to start in January 2021.

According to Ofcom, the auction will increase the total amount of spectrum available for mobile in the UK by nearly a fifth (18 per cent) – bringing better and faster services to consumers and business.

“Demand for getting online on the move is soaring, and the pandemic has only increased the importance of mobile services to people and businesses,” commented Philip Marnick, Ofcom’s Spectrum Group Director. “Releasing these airwaves promptly will bring a much-needed capacity boost, helping mobile customers get a better service.”

Ofcom has a duty to ensure spectrum is allocated efficiently, for the benefit of consumers. Ofcom also ensures companies can compete fairly and that customers have a strong choice of mobile networks. Suitable airwaves are scarce, and Ofcom says that auctions are the best way to achieve these aims when demand is greater than supply.

Some mobile operators had argued for the spectrum to be allocated through an administrative process, instead of an open auction, in light of the coronavirus. Having examined this suggestion, Ofcom does not believe it would meet its duty to secure optimal use of the UK’s spectrum. It is also important to make the spectrum available to mobile users without unnecessary delay.

Ofcom has written to mobile explaining its reasoning, and published new guidance on the auction process, so that it can be held safely during the pandemic. It has also confirmed the rules for how the auction will work, after further consultation on modelling and technical matters.

The auction will involve companies bidding for spectrum in two different frequency bands.

  • The 700 MHz band. Ofcom is releasing 80 MHz of spectrum in the 700 MHz band, following a four-year programme to clear the band of its existing uses for digital terrestrial TV and wireless microphones. These airwaves are ideal for providing good-quality mobile coverage, both indoors and across very wide areas – including the countryside. Releasing these airwaves will also boost the capacity of today’s mobile networks – offering customers a more reliable service.
  • The 3.6-3.8 GHz band. Ofcom is releasing 120 MHz of spectrum in 3.6-3.8 GHz band. These important airwaves are part of the primary band for 5G and capable of carrying lots of data-hungry connections in concentrated areas. All four of the biggest mobile operators have launched 5G in the last year and releasing these airwaves will help increase the capacity and quality of mobile data services.

The spectrum would be made available for bids in the following lots:

  • Six lots of 2×5 MHz (60 MHz in total) in the 700 MHz band with a reserve price of £100 million (€85m) per lot.
  • Four lots of 5 MHz (20 MHz in total) of 700 MHz downlink-only spectrum, with a reserve price of £1 million per lot.
  • 24 lots of 5 MHz (120 MHz in total) of 3.6-3.8 GHz spectrum, with a reserve price of £20 million per lot.
  • As Ofcom is not planning to include coverage obligations anymore, the two spectrum lots that carried a proposed maximum discount each of between £300 million-£400 million will no longer apply.

Ofcom is using an auction format known as ‘simultaneous multiple round ascending’ (SMRA).

It has imposed a 37 per cent cap on overall spectrum holdings, which has the effect of restricting existing mobile companies to acquiring the following amounts:

  • BT/EE – 120 MHz;
  • H3G – 185 MHz;
  • Vodafone – 190 MHz;
  • In view of its current spectrum holdings, O2 will not be restricted by the cap.

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