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27th Jul 2017


Ofcom sets the rules for 5G spectrum auction

The 5G spectrum auction will take place before the end of the year and the rules are in place by the regulator.

What I know so far…

190MHz of the spectrum will be auctioned in all.

40MHz in the immediately useable 2.3GHz band is currently supported by various devices including Apple and Samsung devices.

150MHz in the 3.4GHz band isn’t compatible with many current devices but will be useable in the future.

The latter part of the spectrum will be fundamental to the rollout of 5G so it’ll be valuable to all the major networks. (There are some limits on how much the operators can acquire.)

Ofcom is placing a cap of 255MHz on the immediately useable spectrum that any mobile network can hold as a result of this auction. This will restrict the ability for some networks to bid on the 2.3GHz band and Ofcom are also placing a cap of 340MHz on the overall amount of spectrum that any network can hold as a result of the 5G spectrum auction. These caps are necessary because there are existing imbalances in the amount of spectrum acquired by the UK’s major network operators – that’s a problem because lack of spectrum could make it hard for networks to keep up with demand, especially as demand is expected to go-through-the-roof come 2020.

Ofcom is also wary that spectrum in the 3.6 to 3.8GHz band won’t be available for 5G use as soon as expected which makes the spectrum that’s being auctioned even more valuable!

What the caps mean for EE (BT Mobile)… EE has most of the spectrum at the moment (255MHz in total) which means they won’t be able to bid on the 2.3GHz band at all. They’re still some way below the overall spectrum cap of 340MHz though, which means they could potentially win up to 85Mhz of the 3.4GHz band.

That wouldn’t be a bad result as that’ll be more than half the total amount that’s being auctioned in that band. If EE did come away with that amount of the 5G spectrum, they would have acquired 37% of the useable spectrum – a figure which includes 80MHz in the 700MHz band.

One thing to note, just because EE could potentially have that much of the available spectrum doesn’t mean it will actually get it. Ofcom have set reserve prices of £10m per 10MHz lot of the 2.3GHz band and £1 million for a 5MHz block in the 3.4GHz band.

Another element worth noting is the fact that Ofcom will award the spectrum to the network(s) that are “most likely to put it to the best use in the interest of consumers”, not just those with the deepest pockets!

If EE does hit the 340MHz cap, that won’t help EE today as it’s not part of the immediately useable spectrum, however, it puts the company in a very strong position for the launch of 5G.

What the caps mean for Vodafone… Vodafone has the second most spectrum with 176MHz overall which, like EE, is also immediately ready-to-use. That means the network can grab up to 160MHz of the spectrum in the 5G auction but unlike EE, it’s not prevented from bidding on the 2.3GHz band. Assuming Vodafone comes away with 160MHz (very unlikely due to fierce competition) it depends on how the spectrum is split as to where that leaves the network. Theoretically it could come away with all 40MHz of immediately useable spectrum which could boost its current network, or, it could grab all of the 5G-focused 3.4GHz band or a combination of the two.

What the caps mean for Three… 3 currently has 90MHz of immediately useable spectrum and 40GHz that should be useable by 2020. As such there are no caps on what it can bid on or acquire during the auction. Although it’s not possible for Three to get close to EE or Vodafone’s immediately useable spectrum, it’s feasible that it could level out with them in terms of total spectrum – though only if it comes away with the bulk of the spectrum being auctioned.

Whats the caps mean for O2… O2 is in a similar boat to 3 but with even less spectrum – just 86MHz, all of which is immediately useable. As such there’s no restrictions on what it can bid for in the 5G spectrum auction. Theoretically, it could come away with all the auctioned spectrum which would give it marginally more than EE to play with – though most of that won’t be immediately useable, which EE’s is.

Please note, it’s highly unlikely that any one network would win all the spectrum that’s being auctioned but it’s clear from the caps that Ofcom wants to even-things-up – don’t be surprised if O2 and Three come away with a lot!