Ofcom finalises rules for mobile airwaves auction

13 Mar 2020 01:33 PM

Ofcom has today confirmed how we will release important airwaves to help improve mobile broadband and support the rollout of 5G.

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 more people access to 5G networks, we will release more mobile airwaves through an auction. This will increase the total amount of airwaves available for mobile in the UK by nearly a fifth (18%). Following consultation, we have today confirmed the rules for how the auction will work.

The airwaves companies will bid for

The auction will involve companies bidding for spectrum in two different frequency bands.

How the auction will work

Similar to our 2018 spectrum auction, this year’s auction will involve two stages. It will work like this:

To give mobile operators the opportunity to create more continuous ‘blocks’ of 5G-ready spectrum, the assignment stage allows winners of 3.6-3.8 GHz spectrum to negotiate their placements within the band among themselves.

Supporting competition in the mobile market

Ofcom has a duty to ensure spectrum is used efficiently. We also ensure companies can compete fairly and that customers have a strong choice of mobile networks. To help maintain strong competition in the UK mobile market, we will impose a 37% cap on the overall spectrum that any one mobile company can hold following the auction.

Improving mobile coverage

On 9 March, the Government announced it had reached agreement with the four mobile network operators - BT/EE, O2, Three and Vodafone – to set up a Shared Rural Network to improve mobile coverage across the UK. This involves each company committing to deliver good-quality 4G coverage to at least 90% of the UK over six years.

By mobile companies working together, supported by Government funding, the agreement will achieve higher coverage than Ofcom could have required under our powers, and so we will not include coverage obligations in our auction.

The four mobile network operators have agreed for Ofcom to vary their spectrum licences to give effect to the coverage commitments. We will also monitor, and report, on their progress in meeting the new commitments.

Philip Marnick, Spectrum Group Director at Ofcom, said: 

“Demand for getting online, on the move is soaring, with mobile customers using nearly 40% more data year on year. So releasing these airwaves will bring a much-needed capacity boost - helping mobile customers get a better service.

“We’re also releasing more airwaves to help cement the UK’s place as a world leader in 5G.”

Next steps

Alongside our decisions on how the auction will work, we have finalised the Auction Regulations. Once the regulations have been made and come into force, we will invite applications from potential bidders for the auction. We will assess all applications, before publishing details of who has qualified to take part and when the principal stage will begin.

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. The 37% cap on overall spectrum holdings 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.