Ofcom outlines rules for UK 5G spectrum auction


Airwaves for mobile broadband to be sold in 2.3 GHz and 3.4 GHz bands

UK regulator, Ofcom, has today set out plans to release valuable new airwaves to meet the growing demand for mobile broadband.

Next year, Ofcom will auction 190MHz of spectrum in the 2.3GHz and 3.4GHz bands; an increase of just under a third of the total mobile spectrum currently available. This represents more than three quarters of the 4G airwaves that were released in 2013.

People and business increasingly depend on reliable, high speed mobile broadband. More than seven in ten adults currently have a smartphone, and the amount of data carried over UK mobile networks is rising exponentially. Acquiring extra spectrum is one of the ways operators can increase their network capacity, and the frequencies being sold will help meet consumer demand for mobile broadband services, said Ofcom.

Ofcom has set reserve prices of £10 million per 10MHz lot of the 2.3 GHz band, and £1 million for a 5MHz block in the 3.4GHz band. These are unchanged since Ofcom’s Statement in October 2015, giving a total reserve price of £70 million for the 190MHz of spectrum to be awarded.

The 40MHz of spectrum to be sold in the 2.3GHz band is already supported by mobile devices, such as the iPhone. These airwaves could be used immediately after release to provide extra capacity, meaning faster downloads and internet browsing for consumers.

The 150MHz of spectrum to be sold in the 3.4GHz band is not currently used by most mobile devices, but is likely to be usable by future devices in coming years. The 3.4GHz band has also been identified as central to the rollout of 5G across Europe; many existing mobile handsets from major manufacturers, including the Apple iPhone 6, HTC Desire and Samsung Galaxy, are already compatible with the 2.3GHz spectrum. The band is so far being used for high speed 4G mobile broadband networks in ten countries outside Europe, including China, India and Australia. The 3.4GHz band is currently being used for 4G wireless broadband to fixed devices in six countries including the UK, Canada and Spain.

Ofcom proposes to apply a cap, of 255MHz, on “immediately useable” spectrum that any one operator can buy. As a consequence of this proposed cap, BT/EE would not be able to bid for spectrum in the 2.3GHz band as BT/EE currently holds 45% of immediately useable UK mobile spectrum. Meanwhile, Vodafone holds 28%, O2 15% and Three 12%.

Ofcom is concerned that, if these immediately usable holdings were to become more unbalanced, this could harm competition in the next few years.

As a result of the new spectrum in the market after the award, BT/EE’s overall share of immediately useable spectrum will fall, from 45% to 42%. If BT/EE were to acquire all the 2.3GHz being awarded, it would have almost half of the immediately usable spectrum in the market.

Ofcom stated it is not proposing a cap on the amount of 3.4GHz spectrum. This is because the band is not immediately useable, and the regulator believe it is important that operators are given an opportunity to acquire this spectrum so they are able to consider early development of 5G services.

Operators hold varying amounts of spectrum but the UK mobile market remains among the most competitive in Europe and has been serving consumers well. For example, UK mobile users report much higher satisfaction with the cost of their service than people in other major countries, according to Ofcom’s International Communications Market Report 2015.

The UK benefits from four national network mobile operators, as well as numerous ‘virtual’ operators who use the networks of the four national mobile operators to compete for retail customers. This competition helps ensure high quality services, competitive prices, choice and innovation.

Unlike the 4G auction in 2013, Ofcom is not proposing coverage obligations on the winning bidders in this auction. This is because the frequencies being sold are best suited for delivering greater network capacity, not achieving wide geographic coverage.

Philip Marnick, Ofcom spectrum group director, said: “Spectrum is the essential resource that fuels the UK’s economy. This auction can help ensure that UK consumers can access the mobile data services they need, and that operators can continue to innovate and build for the future.

“The UK has long benefitted from strong mobile competition. We are designing the auction to ensure everyone benefits from a market that continues to innovate and serve them well.”

Demand for mobile data services is expected to rise considerably in the coming years. To address this, more spectrum is needed. Ofcom plans to release further spectrum for mobile use. These airwaves include frequencies in the 700MHz band, which is currently used by Freeview television and wireless microphones. Another potential source of future mobile spectrum is the 3.6GHz to 3.8GHz band. This is currently used by a mix of satellite services and ‘fixed links’, used for high capacity data transmission.

The closing date for responses to today’s consultation on the next spectrum auction is 30 January 2017.


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