Ofcom has started a final consultation of the planned auction of 190 MHz of spectrum next year. This includes 40 MHz in the 2.3 GHz band, which can be used immediately to boost capacity of 4G networks, and 150 MHz in the 3.4 GHz band, which will be available in the coming years and may be one of the first bands to be applied for 5G services.
Ofcom said it does not intend to use the auction as a way to increase coverage in rural areas, as the frequency bands are more suited for increasing capacity. However, the consultation does address competition issues, due to the current asymmetry in spectrum holdings of the four network operators following the acquisition of EE by BT, which holds over 40 percent of the frequencies already in issue.
Given that more spectrum is planned for auction in the coming period, including the 700 MHz band in 2018, the regulator said it does not expect the release of the 2.3 and 3.4 GHz bands to put at threat any of the four existing operators, even if one were to obtain none of the frequencies in the auction. However, competition could be weakened if the current asymmetry in spectrum holdings worsens.
In particular, Ofcom sees a risk that the larger operators could bid a high amount to try to obtain much of the 2.3 GHz band purely to gain a competitive advantage over the others. As a result, Ofcom proposed a limit of 255 MHz of immediately deployable spectrum that any one operator can hold. The cap would include the 2.3 GHz band but exclude the 3.4 GHz band, as equipment compatible with the latter is not expected to available for a few years yet.
The amount of 255 MHz is equal to BT/EE's current share of 42 percent of such spectrum available, meaning the operator is effectively excluded from bidding for the 2.3 GHz band. Under the same measurement, Vodafone holds 29 percent of available spectrum, O2 UK 14 percent and 3 UK 15 percent.
The consultation also includes some changes to auction rules compared to the draft regulations issued in October 2015, covering in particular the liability of bidders who withdraw offers in the early stages of the auction. The consultation is open for comment until 30 January 2017.
