Ofcom is inviting potential bidders to comment on proposals for the Government’s latest spectrum auction valued at around £70m. The auction of spectrum in the 2.3 GHz and 3.4 GHz bands, is expected to take place in late 2015 or early 2016.
The watchdog said this latest auction is expected to attract mobile operators, since the spectrum bands are frequencies suitable for providing very high data capacity.
Under the proposals, Ofcom intends to hold an auction for a total of 190 MHz of spectrum in the two bands – equivalent to around three-quarters of the airwaves released by Ofcom through the 4G auction in 2013. The spectrum is currently used by the Ministry of Defence, and is being made available as part of a wider Government initiative to free up public sector spectrum for civil uses.
Ofcom proposes to auction the spectrum in 38 lots of 5 MHz, and bidders can request a minimum bid of four lots per band. To promote competition, Ofcom has also proposed a safeguard cap, limiting operators’ mobile spectrum holdings to 37% of relevant spectrum. This overall spectrum cap would include the newly-auctioned spectrum.
Ofcom is proposing a reserve price of £2.5m to £5m per 5 MHz lot for the 2.3GHz band and £1m per 5 MHz lot for the 3.4GHz band. The reserve prices are based on a benchmark price paid for 2.6GHz in the UK’s 2013 spectrum auction.
Philip Marnick, Ofcom Spectrum group director, said: ‘Today marks an important step in ensuring that the UK has sufficient spectrum to support our wireless economy. ‘It comes in response to the fast pace of change and innovation taking place in the communications sector, which is placing increased demands on how spectrum is used by all industries. One important way of meeting this demand is making new spectrum available and its use as flexible as possible.’
Telecoms analyst Eddie Murphy, MD of Priory Consulting, said operators need to improve 3G data coverage but doubted the auction will improve the situation. ‘O2 and Vodafone’s data coverage is pathetic outside of urban areas. It isn’t that they don’t have the necessary spectrum, it is just a strategic decision they have taken not to use what they have,’ he added.
The consultation closes on 23 January 2015.