5G UK auction

4 May 2021

Ofcom 5G auction

5G has launched in many towns and cities across the UK, but we only got to this point because of a 5G spectrum auction back in 2018, which has now been followed up by a second 5G spectrum auction in 2021.

​We’ve put together a guide to everything you need to know about the 5G auctions, from what frequencies have been and are being sold off, to how much each network has won and more. More information about the specifics of the different frequencies can be found in our guide to 5G Frequencies in the UK.

First 5G Spectrum Auction Results Summary (5th April, 2018)

Operator

2.3GHz Spectrum Won 

3.4GHz Spectrum Won

O2

40MHz

40MHz

Vodafone

Nil

50MHz

EE

Nil

40MHz

Three

Nil

20MHz

Note: The 3.4GHz spectrum band here actually refers to spectrum ranging from 3.4GHz – 3.6GHz, with different operators acquiring spectrum across different parts of the band. Below we’ll detail exactly what spectrum each network acquired.

Ofcom’s first 5G spectrum auction was completed in April 2018, with EE, O2, Vodafone and Three all winning some spectrum.

O2 acquired the most, winning all 40MHz of the 2.3GHz spectrum that was being auctioned (paying £205,896,000), as well as 40MHz of 3.4GHz spectrum (for which it paid £317,720,000). Its 40MHz of 3.4GHz spectrum covered the 3500MHz – 3540MHz part of the band.

Vodafone meanwhile won 50MHz of 3.4GHz spectrum, paying £378,240,000, specifically acquiring the 3410MHz – 3460MHz part of the band.

EE paid £302,592,000 for 40MHz of 3.4GHz spectrum (covering 3540MHz – 3580MHz), and Three acquired the least, paying £151,296,000 for 20MHz of 3.4GHz spectrum, specifically the 3460MHz – 3480MHz range. However, the network already held 40MHz of 3.4GHz spectrum (specifically 3480MHz – 3500MHz and 3580MHz – 3600MHz), among other spectrum ideal for 5G.

In total, Ofcom auctioned 190MHz of high capacity spectrum in the 2.3GHz and 3.4GHz bands, comprising 40MHz in the 2.3GHz band and 150MHz in the 3.4GHz band.

That amount is equivalent to roughly three-quarters of the spectrum auctioned by Ofcom at the 4G spectrum auction in 2013, and increases the spectrum available for mobile devices by nearly a third. Spectrum in these bands is well suited to 5G, as it can carry large amounts of data.

Second 5G Spectrum Auction Results Summary (27th April, 2021)

Operator

700MHz Spectrum Won 

3.6GHz Spectrum Won

O2

20MHz

40MHz

Vodafone

Nil

40MHz

EE

40MHz

40MHz

Three

20MHz

Nil

Note: The 3.6GHz spectrum band here actually refers to spectrum ranging from 3.6GHz – 3.8GHz, with different operators acquiring spectrum across different parts of the band.

The principal stage of the UK’s second 5G spectrum auction was completed on 17th March, 2021, and by the end of April the whole process was complete.

All four major UK networks again acquired some spectrum in this auction, but EE acquired the most here, coming away with 40MHz of 3.6-3.8GHz spectrum (costing £168,000,000), and 40MHz of 700MHz spectrum. The 700MHz spectrum was split into 2 x 10MHz paired frequency lots (costing £280,000,000), and 20MHz of individual frequency lots (costing £4,000,000).

EE’s 3.6GHz spectrum covers the 3680-3720MHz part of the band, while its 700MHz spectrum covers the 723-733MHz, 778-788MHz, and 738-758MHz parts of that band.

The next most was acquired by O2, which came away with 40MHz of 3.6-3.8GHz spectrum (for £168,000,000), and 2 x 10MHz (so 20MHz total) of paired frequency 700MHz spectrum (for £280,000,000). O2’s 3.6GHz spectrum covers 3760-3800MHz, while its 700MHz spectrum covers 703-713MHz and 758-768MHz.

Then there’s Vodafone, which secured 40MHz of 3.6-3.8GHz spectrum (for £176,400,000), but no 700MHz spectrum. That spectrum is placed in the 3720-3760MHz part of the band.

The least spectrum was acquired by Three, which came away with just 20MHz (2 x 10MHz of paired frequency) 700MHz spectrum (for £280,000,000). This covers the 713-723MHz and 768-778MHz parts of the 700MHz band.

In total in this auction then, Ofcom auctioned 80MHz of 700MHz spectrum, and 120MHz of 3.6-3.8GHz spectrum. This increases the spectrum available to mobile networks by around 18%.

This spectrum comes with a 20-year licence, so the winning networks currently have access to it until 2041.

What is the auctioned spectrum being used for?

The 2.3GHz spectrum was immediately available to operators to provide extra capacity for their 4G and 3G networks. The band is supported by a wide range of mobile devices from the likes of Apple, Samsung and others.

The 3.4GHz spectrum is not compatible with most current non-5G devices and is being used for the rollout of 5G networks. It has been identified as central to 5G rollout across Europe. The good news is that there’s a large range of 5G phones now that will be able to make use of this spectrum.

As for the spectrum sold off at the second auction, the 3.6-3.8GHz spectrum is also ideal for 5G use, while the 700MHz spectrum is ideal for improving coverage in rural areas and inside buildings.

Post Auction Operator Spectrum Holdings

Operator

5G spectrum held

Total spectrum held

EE

80MHz

378MHz

Vodafone

90MHz

269MHz

O2

80MHz

226MHz

Three

140MHz

253MHz

The two 5G spectrum auctions so far have left all the UK’s networks in a reasonably good position, with Vodafone, O2 and Three all having similar amounts of spectrum in total, while EE has significantly more.

That said, while EE’s total holdings of 378MHz are a lot higher than rivals, only 80MHz of that is ideally suited to 5G (the 40MHz of 3.4MHz won in the first auction coupled with the 40MHz of 3.6GHz won in the second auction).

O2 and Vodafone are in a similar position there, but Three is miles ahead with 140Mhz of 5G spectrum, despite only obtaining 20Mhz of 3.4GHz spectrum in the first 5G auction and no 5G spectrum in the second auction (as the 700MHz band is too low frequency to be optimal for high speed use, so we’re not counting that as 5G spectrum).

That’s because it already had substantial spectrum holdings ideal for 5G, much of which was obtained through its purchase of UK Broadband a few years earlier.

Three argues that this spectrum haul makes it the only UK company that can offer ‘true’ 5G initially.

Three has also managed to end up with a 100MHz contiguous block of 5G spectrum, by adjusting the location of some of the spectrum it owns. That should further boost its 5G network, and it’s something that even after the second auction the other UK networks won’t be able to match, as they all still have under 100MHz of 5G spectrum in total.

Though notably O2 and Vodafone have arranged to trade some of their spectrum, which will leave O2 with an 80MHz block of contiguous spectrum, and Vodafone with good spectrum proximity.

The upshot is that all the networks now have more spectrum than they did, and all now look a lot more prepared for 5G, but some seem in far stronger positions than others. However, things look a lot more even than they did after the first 5G spectrum auction, which left Three even further in the lead for 5G spectrum, and O2 miles behind for overall spectrum holdings.

What spectrum is still to be auctioned?

Ofcom is working on freeing up 168MHz of spectrum between 7.9GHz and 8.4GHz, and 2.25GHz of spectrum between 24.25GHz and 26.5GHz. Additionally, it plans to make the 1492-1517MHz band available for future wireless broadband services by December 2022.

There may yet be additional auctions beyond all this, as Ofcom has identified the 26GHz band (24.25-27.5GHz) as the next priority for global harmonisation, which it put forward for use at WRC-19 (World Radiocommunications Conference 2019), where the motion was supported.

Ofcom is also considering the 37-43.5 and 66-71GHz bands, and potentially also the 32GHz (31.8 – 33.4GHz) band.

These higher frequency bands (known as mmWave or millimetre wave) are key to harnessing the full speed and potential of 5G, so networks will probably be keen to access them, given that they don’t have any mmWave spectrum yet.

Note however that not all of this spectrum will necessarily be ‘auctioned’ as such. Some might be offered on a first come, first served basis.

What was the spectrum previously used for?

The 2.3GHz - 3.4GHz spectrum was previously used by the Ministry of Defence (MoD), but has been freed up by the government to make it available for civil uses. This is part of a wider government initiative to release or share 500MHz of spectrum for civilian use by 2020. The 7.9GHz-8.4GHz spectrum was also being used by the MoD.

Some 3.4GHz spectrum is used for 4G wireless broadband, such as by Relish in London, which is now owned by Three following its acquisition of UK Broadband and has been rebranded as Three Broadband.

The spectrum in the 3.6GHz - 3.8GHz bands is partially in use by fixing links and satellite services, but Ofcom has auctioned off unused spectrum in those bands, hopefully without impacting those services.

The 700MHz band was previously used by Freeview television and wireless microphones. The government has contributed £500-600 million to clearing the spectrum, a process which began in March 2017 with the reconfiguration of a digital terrestrial television (DTT) transmitter in Selkirk. 

When will further auctions be held?

There’s no news on exactly when further spectrum auctions might be held, but we’ll update this article when that changes.

Auction rules

The two 5G spectrum auctions so far have had slightly different rules. First up, the 2018 auction included the following rules:

  • No operator would be able to hold more than 255MHz of immediately usable spectrum, i.e. in the 2.3GHz band, following the auction.
  • No operator would be able to hold more than 340MHz of the total amount of spectrum following the auction, equivalent to 37% of all the mobile spectrum that was expected to be useable in 2020.

By imposing a cap on the overall amount of spectrum, Ofcom hoped to satisfy competition concerns while enabling all operators to develop 5G services, hence there was no limit on the amount of 3.4GHz spectrum a company could hold.

Ofcom wasn’t proposing any coverage obligations on the winning bidders like it did with the 4G auction in 2013. That’s because the provision of these latest frequencies is more about boosting network capacity than expanding network coverage.

As for the 2021 auction, Ofcom had talked about including coverage obligations, but changed its mind. Ofcom ultimately decided that this auction would have a similar framework to the 2018 auction, using a format known as ‘simultaneous multiple round ascending’.

This involved two stages. First up there’s a ‘principal stage’, in which networks would bid for airwaves in separate ‘lots’ to determine how much spectrum they each win. Then there’s an ‘assignment stage’, which is a round of bidding to decide the specific frequencies that winning bidders will be allocated.

This is important as it allows networks to try and come away with large blocks of contiguous spectrum (which is ideal) rather than fragmented spectrum (which isn’t).

The only real restriction was a 37% (416MHz) cap on the overall spectrum that any one network could hold following the auction.

What did the caps mean for bidders?

The caps in the first 5G spectrum auction meant that EE was not able to bid for spectrum in the 2.3GHz band and was able to win a maximum of 85MHz of 3.4GHz spectrum (though in reality it only came away with 40MHz), as before the auction it had around 45% of the UK’s immediately useable spectrum.

Vodafone was able to win a maximum of 160MHz of spectrum across both bands – a cap it didn’t come close to. There were no restrictions on the amount of spectrum O2, Three or indeed any other bidder could win.

The caps in the second (2021) auction meant that EE/BT could at most acquire 120MHz in the auction, Three at most 185MHz, and Vodafone at most 190MHz, with no limit on what O2 could acquire. Of course, in practice no network came anywhere near hitting those limits, as you can see in the charts above.

What did the spectrum cost?

Ofcom auctioned the spectrum in lots, with reserve prices of £10m per 10MHz lot of 2.3GHz spectrum and £1m for a 5MHz block in the 3.4GHz band. This gave a total reserve price of £70m for the total 190MHz of spectrum that was auctioned in the 2018 auction.

In practice, the costs went a lot higher than that. As noted above, O2 paid £205,896,000 for 40MHz of 2.3GHz spectrum, and £317,720,000 for 40MHz of 3.4GHz spectrum.

Vodafone paid £378,240,000 for 50MHz of 3.4GHz spectrum, EE paid £302,592,000 for 40MHz of 3.4GHz spectrum, and Three paid £151,296,000 for 20MHz of 3.4GHz spectrum. The total auction spend across all networks was £1,355,744,000.

As for the 2021 spectrum auction, the reserve prices were as follows:

  • Six lots of 2 x 5MHz (60MHz in total) in the 700MHz band with a reserve price of £100 million per lot.
  • Four lots of 5MHz (20MHz in total) of 700MHz downlink-only spectrum, with a reserve price of £1 million per lot.
  • 24 lots of 5MHz (120MHz in total) of 3.6-3.8 GHz spectrum, with a reserve price of £20 million per lot.

In practice, EE paid £168,000,000 for 40MHz of 3.6-3.8GHz spectrum, £280,000,000 for 2 x 10MHz of 700MHz paired frequency lots, and £4,000,000 for 20MHz of 700MHz downlink-only spectrum.

O2 meanwhile paid £168,000,000 for 40MHz of 3.6-3.8GHz spectrum, and £280,000,000 for 2 x 10MHz of 700MHz paired frequency lots.

Vodafone paid £176,400,000 for 40MHz of 3.6-3.8GHz spectrum, and Three paid £280,000,000 for 2 x 10MHz of 700MHz paired frequency lots. During the assignment stage, an additional £23 million was spent by networks to secure specific frequency positions. The total spend across all networks in this auction then was £1,379,400,000.

What will be the rules for future auctions?

At the time of writing it’s unknown what the rules for any future auctions will be, but it’s likely that Ofcom will keep the 37% cap on the overall amount of spectrum that any network can hold.

What’s next?

All four major UK networks have begun rolling out their 5G networks with the help of the spectrum they won in the first 5G spectrum auction, and soon they’ll be able to start boosting their 5G services with spectrum acquired in the second auction.

Providing widespread 5G coverage though is a process that will take years, and will likely be aided by additional spectrum auctions. So expect some or all of the UK’s networks to increase their spectrum holdings ever more over time.

Useful reading: What is 5G?

Sacha Kavanagh
About Sacha Kavanagh

Research Analyst/ Technical Writer

Sacha has more than 20 years’ experience researching and writing about enterprise tech, telecoms, data centres, cloud and IoT. She is a researcher, writer and analyst, and a regular contributor to 5G.co.uk writing guides and articles on all aspects of 5G.

View more posts by Sacha Kavanagh >
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