Ofcom confirms plans for spectrum auction early next year

3 Aug 2020 03:01 PM

Ofcom yesterday confirmed plans to auction important airwaves to help improve mobile broadband and support the rollout of 5G.

• January auction for important airwaves to boost mobile capacity and enhance 5G services
• Capacity for mobile will increase by nearly 20% – leading to better and faster services

Ofcom manages the UK’s airwaves – or spectrum – a finite resource that is essential for wireless services including mobile phones.

To help improve mobile services and give people better access to 5G we will release more airwaves in an auction, with bidding set to start in January 2021.

The auction will increase the total amount of airwaves – or ‘spectrum’– available for mobile in the UK by nearly a fifth (18%) – bringing better and faster services to consumers and business.

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

Taking account of coronavirus

Ofcom has a duty to ensure spectrum is allocated efficiently, for the benefit of consumers. We also ensure companies can compete fairly and that customers have a strong choice of mobile networks. Suitable airwaves are scarce, and 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, we do not believe it would meet our 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.

We have written to mobile operators (PDF, 189.0 KB) explaining our reasoning, and published new guidance (PDF, 1.5 MB) on the auction process, so that it can be held safely during the pandemic.

The airwaves open for bidding

We have 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. We are 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. We are 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.

Notes to Editors

1. The spectrum would be made available for bids in the following lots:
   • Six lots of 2x5 MHz (60 MHz in total) in the 700 MHz band with a reserve price of £100m per lot.
   • Four lots of 5 MHz (20 MHz in total) of 700 MHz downlink-only spectrum, with a reserve price of £1m per lot.
   • 24 lots of 5 MHz (120 MHz in total) of 3.6-3.8 GHz spectrum, with a reserve price of £20m per lot.
   • As we are not planning to include coverage obligations anymore, the two spectrum lots that carried a proposed maximum discount each of between £300-400m will no longer apply.
2. We are using an auction format known as ‘simultaneous multiple round ascending’ (SMRA).
3. We have imposed a 37% cap on overall spectrum holdings, which has the effect of restricting existing mobile companies to acquiring the following amounts:
   • BT/EE - 120 MHz BT/EE;
   • H3G - 185 MHz;
   • Vodafone - 190 MHz;
   • Due to its current spectrum holdings, O2 will not be restricted by the cap.
4. The 700 MHz band has previously been used for digital terrestrial TV and wireless microphones. The 3.6-3.8 GHz band is used for fixed links and satellite services.
5. In December 2018 we proposed including coverage obligations in our auction rules. These would have required up to two mobile companies to increase coverage in rural areas, in exchange for winning discounted spectrum through the auction. The mobile network operators developed the Shared Rural Network plan in response to Ofcom’s proposals, and it is therefore no longer appropriate to include coverage obligations in the auction.