It has felt like a long wait for the second 5G spectrum auction, but with a vague spring 2020 time frame the next auction is almost upon us, and Ofcom has now confirmed the rules.
If you’ve been keeping up with the proposed plans then there won’t be any real surprises here, as the final rules are in line with what Ofcom has been proposing for a while, but they’re now official.
First up, a reminder of what’s up for grabs: Ofcom is auctioning 120MHz of spectrum in the 3.6-3.8GHz band and 80MHz of spectrum in the 700MHz band, both of which have been identified as prime candidates for 5G use. In total, this spectrum would add 18% to the amount available for mobile in the UK, providing much-needed capacity.
No obligations
While Ofcom toyed with coverage obligations for a while, it has removed that restriction, and now the only limit is a cap on the total amount of spectrum each network can have. That cap is 37% (416MHz), which for the purposes of this auction means that EE/BT can win up to 120MHz, Three can win up to 185MHz, and Vodafone can win up to 190MHz.
There’s no limit on what O2 can win, as it has less spectrum overall than rivals at the moment, but in practice that cap won’t prove very restrictive here anyway.
The spectrum auction will take place over two stages. First there’s the ‘principal stage’, in which companies can bid for spectrum. They’ll be bidding on a number of separate ‘lots’, which are divided 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 3.6-3.8GHz spectrum, with a reserve price of £20 million per lot.
Once it has been determined how much spectrum each company has won, the auction moves on to the second stage, dubbed the ‘assignment stage’. Here, winning bidders bid again, but this time to determine the specific frequencies that they’ll be allocated.
100MHz is the goal
This is important, because having a large block of contiguous spectrum is better than having it split up across the band. At the moment, Three is the only network with 100MHz of contiguous spectrum, which is a figure that the ITU (the global standards body on 5G technology) states is required for ‘true’ 5G.
So that’s a figure the other networks will probably be aiming for too, while Three looks to further boost its total – and potentially its contiguous – spectrum holdings.
The auction could allow one or even all of the UK’s networks to significantly strengthen their 5G spectrum portfolios, but it will depend on how the auction plays out. Winners shouldn’t have to wait long to make use of their spectrum either, as the 700MHz band will become available for mobile use by May, while the 3.6-38GHz band will be available by June.
And while some networks are likely to come out of this stronger than others, this won’t be their last opportunity to acquire spectrum, as further auctions are planned in future.
