UK regulator Ofcom has set the rules for the first auction of 5G spectrum, planned for later this year. It will offer 40 MHz in the 2.3 GHz band, available for immediate use, and 150 GHz in the 3.4 GHz band, expected to be used for 5G services in future. The bidders will be subject to limits in how much spectrum they can buy, in an attempt to limit the dominance of BT/EE and Vodafone.
As proposed in the consultation last November, each operator will face a cap of 255 MHz on the amount of 'immediately useable' spectrum that it can hold. In addition, a cap of 340 MHz will apply on the total amount of spectrum a single operator can hold. This cap amounts to 37 percent of all the mobile spectrum expected to be useable in 2020, which includes not only the spectrum available in this auction but also the 700MHz band.
The caps mean BT/EE will not be able to bid for spectrum in the 2.3GHz band and can only acquire a maximum 85 MHz of new spectrum in the 3.4GHz band. The overall cap also means that Vodafone could gain a maximum 160 MHz of spectrum across both the 2.3GHz and 3.4GHz bands.
In addition to the 700 MHz band, which still requires vacating by TV services, Ofcom has put off licensing the 3.6-3.8 GHz band. The latter frequencies are also expected to be used for 5G, but Ofcom said it has "less confidence" that these will be available soon nationwide. Furthermore, 3 UK has recently acquired more spectrum in the 3.4 and 3.6-3.8 GHz bands, reducing its gap in spectrum holdings with the other operators.
3 UK responded with a statement calling Ofcom’s proposal "a kick in the teeth for all consumers and in particular for the near-200,000 people who signed up to the 'Make the Air Fair' campaign". The campaign was run by the operator late last year to rally public support for its call of a 30 percent cap on each operator's spectrum holdings. The company said Ofcom had shown little interest in tackling the problem of an "imbalanced" mobile market, and the operator would make responding to Ofcom a "matter of urgency".
O2 UK, which has even less spectrum than 3, said it was also disappointed with Ofcom's announcement. CEO Mark Evans said the proposed auction terms "fall short of our expectations but it is important we now press ahead with the auction quickly so that the spectrum can be obtained by operators that will deploy it for the benefit of consumers, businesses and ultimately UK plc".
According to Ofcom, the current holdings of "immediately usable" spectrum are divided into 255 MHz for BT/EE, 176 MHz for Vodafone, 90 MHz for 3 UK (plus 40 MHz useable in 2020) and 86 MHz for O2. It expects another 190 MHz in the 3.4 GHz band as well as 80 MHz in the 700 MHz band to be available in 2020. Spectrum caps, as well as rural coverage obligations, are also planned for the 700 MHz band and will depend on the outcome of this year's auction.
Ofcom's proposed regulation on the auction rules is open for public comment until 14 August. The regulator also set reserve prices for the auction, at GBP 10 million per 10 MHz of the 2.3GHz band and GBP 1 million for a 5 MHz block in the 3.4GHz band. These are unchanged since Ofcom’s initial statement in October 2015, giving a total reserve price of GBP 70 million for the 190 MHz of spectrum to be awarded.
