Ofcom announces auction “spectrum cap”

Ofcom announces auction “spectrum cap”

Ofcom has announced the rules of its upcoming 4G and 5G spectrum auction, including a 255MHz cap on “immediately usable” spectrum that any one network can purchase. With BT/EE already possessing 291.15MHz (45%), this means they are barred from making any additional 4G purchases. Vodafone may purchase 73.84MHz, O2 157.95 MHz and Three 177.36MHz. The total 4G spectrum available in the auction is 40MHz.

 

in response to the bidding block, EE CEO Mark Allera outlined the network's stance, 'While we don't agree that competition measures should be introduced for this auction, we will now examine Ofcom’s detailed proposal carefully and respond to the consultation.

 

'We are unique in our ambition to expand 4G coverage to 95% of the UK’s landmass by 2020, further than any other UK network has done, and will continue to use our spectrum and network to ensure UK consumers benefit from being at mobile technology’s leading edge.'

 

While the decision by Ofcom is a move away from the open auction the regulator was initially said to be favouring, it stops far short of Three’s request for the cap to be set at 30% - thereby forcing EE and BT to sell spectrum and severely limiting Vodafone’s ability to purchase more.

 

Speaking previously, Three CEO Dave Dyson attacked both Vodafone and BT/EE stating, ‘Fundamentally, we think BT/EE and Vodafone have tried to get spectrum that they didn’t necessarily need. And the main object of that was to deny other operators in that market access to the spectrum.’

 

In a statement made today, Three voiced their disapproval over the new spectrum auction rules, 'Ofcom exists to promote competition and protect consumers but it has once again shown it is not willing to make the big decisions needed to deliver the best outcome for the UK.

 

It has allowed BT and Vodafone to stockpile valuable mobile airwaves and put genuine choice for consumers at risk. It made empty promises to the European Commission that it would tackle this issue but it doesn’t have the courage to do so.

 

The mobile industry is failing customers and Ofcom has showed it has no interest in addressing that. A 30% cap on total spectrum ownership and a spectrum reservation for smaller operators are the only measures that will preserve competition for the benefit of UK mobile consumers.'

 

O2 also criticised the regulator, stating, 'We welcome Ofcom’s consultation on the upcoming spectrum auction. It is a step in the right direction but it doesn’t go far enough to satisfy Ofcom’s stated aim of sustaining four companies that compete effectively and independently on coverage and quality.

 

The auction presents an opportunity to rebalance spectrum and level the playing field across the mobile sector.  We will engage with Ofcom during the consultation process to ensure that customers get the best outcome ensuring a competitive four player market for mobile services.'

 

The decision by Ofcom represents a major shift in their initial plans for the auction. When first announced in 2015, Ofcom stated, ‘Ofcom believes that any cap could prevent a bidder from buying large blocks of adjacent spectrum. Large blocks have the potential to support very fast download speeds, meaning even faster mobile broadband for consumers, which helps pave the way for 5G.’

 

However, commenting after today’s announcement  Philip Marnick, Ofcom’ spectrum group director, said: ‘Spectrum is the essential resource that fuels the UK’s economy. This auction can help ensure that UK consumers can access the mobile data services they need, and that operators can continue to innovate and build for the future.

 

‘The UK has long benefitted from strong mobile competition. We are designing the auction to ensure everyone benefits from a market that continues to innovate and serve them well.’

 

Explaining this change of plans, Ofcom echoed Three’s concerns over spectrum imbalance stating. ‘Ofcom is concerned that, if these immediately usable holdings were to become more unbalanced, this could harm competition in the next few years.’

 

The new 4G bandwith being made available sits in the 2.3MHz area of the spectrum and is already supported by both consumer devices and operator infrastructure, meaning that nearly as soon as the gavel falls, the winning network will be able to upgrade its 4G service nationally.

 

The proposed 5G bandwith totals 150MHz in the 3.4 gHz band, and while outlined as being a key part of 5G rollout in Europe.

 

On top of the upcoming auction outlined above, Ofcom also stated its intention to auction off even more spectrum for mobile communication in the future, with its consultation closing in January 2017. This additional auction is to include frequencies in the 700 MHz band which is currently used by freeview and wireless microphones, and the 3.6GHz to 3.8GHz Band which is currently used by satellite services and ‘fixed link’ transmissions.

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