Ofcom outlines rules for mobile spectrum auction
- Airwaves for mobile broadband to be sold in 2.3 GHz and 3.4 GHz bands
- Auction to help meet mobile broadband demand and future 5G mobile
- Plans to safeguard competition and encourage innovation
Ofcom has today set out plans to release valuable new airwaves to meet the growing demand for mobile broadband.
Next year, Ofcom will auction 190 MHz of spectrum in the 2.3 GHz and 3.4 GHz bands – an increase of just under a third of the total mobile spectrum currently available. This represents more than three-quarters of the 4G airwaves that were released in 2013.(1)
People and business increasingly depend on reliable, high-speed mobile broadband. More than seven in ten adults currently have a smartphone, and the amount of data carried over UK mobile networks is rising exponentially.
Acquiring extra spectrum is one of the ways operators can increase their network capacity, and the frequencies being sold will help meet consumer demand for mobile broadband services.
The 40 MHz of spectrumto be sold in the 2.3 GHz band is already supported by mobile devices, such as the iPhone. These airwaves could be used immediately after release to provide extra capacity, meaning faster downloads and internet browsing for consumers.
The 150 MHz of spectrumto be sold in the 3.4 GHz band is not currently used by most mobile devices, but is likely to be usable by future devices in coming years. The 3.4GHz band has also been identified as central to the rollout of 5G across Europe.(2)
We propose to apply a cap, of 255 MHz, on “immediately useable” spectrum that any one operator can buy. As a consequence of this proposed cap, BT/EE would not be able to bid for spectrum in the 2.3 GHz band.(3)
BT/EE currently holds 45% of immediately useable UK mobile spectrum. Vodafone holds 28%, O2 15% and Three 12%.
Ofcom is concerned that, if these immediately usable holdings were to become more unbalanced, this could harm competition in the next few years.
As a result of the new spectrum in the market after the award, BT/EE’s overall share of immediately-useable spectrum will fall, from 45% to 42%. If BT/EE were to acquire all the 2.3 GHz being awarded, it would have almost half of the immediately usable spectrum in the market.
We are not proposing a cap on the amount of 3.4 GHz spectrum. This is because the band is not immediately useable, and we believe it is important that operators are given an opportunity to acquire this spectrum so they are able to consider early development of 5G services.
Operators hold varying amounts of spectrum. But the UK mobile market remains among the most competitive in Europe and has been serving consumers well. For example, UK mobile users report much higher satisfaction with the cost of their service than people in other major countries.(4)
The UK benefits from four national network mobile operators, as well as numerous 'virtual’ operators who use the networks of the four national mobile operators to compete for retail customers. This competition helps ensure high-quality services, competitive prices, choice and innovation.(5)
Unlike the 4G auction in 2013, we are not proposing coverage obligations on the winning bidders in this auction. This is because the frequencies being sold are best suited for delivering greater network capacity, not achieving wide geographic coverage.
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.”
Planning for the future
Demand for mobile data services is expected to rise considerably in the coming years. To address this, more spectrum is needed. Ofcom plans to release further spectrum for mobile use.
These airwaves include frequencies in the 700 MHz band, which is currently used by Freeview television and wireless microphones. Another potential source of future mobile spectrum is the 3.6 GHz – 3.8 GHz band. This is currently used by a mix of satellite services and ‘fixed links’, used for high-capacity data transmission.
The closing date for responses to today’s consultation on the next spectrum auction is 30 January 2017.
NOTES TO EDITORS
- By releasing these bands, the total amount of mobile spectrum in the market will rise by 29% to 837 MHz, from 647 MHz. The 647 MHz figure represents the spectrum currently held by BT/EE, Vodafone, Telefonica (O2), Three, and the current holding in the 3.4 GHz band of UK Broadband (Relish).
- Many existing mobile handsets from major manufacturers, including the Apple iPhone 6, HTC Desire and Samsung Galaxy, are already compatible with the 2.3 GHz spectrum. The band is so far being used for high-speed 4G mobile broadband networks in ten countries outside Europe, including China, India and Australia. The 3.4 GHz band is currently being used for 4G wireless broadband to fixed devices in six countries including the UK, Canada and Spain.
- Ofcom’s principal duty is to further the interests of citizens and of consumers, where appropriate by promoting competition. In doing so, Ofcom must secure the optimal use of spectrum.
- See Ofcom’s International Communications Market Report 2015.
- In May 2016 the European Commission blocked Telefonica's sale of O2 to CK Hutchison, the owner of Three. The Commission had strong concerns that UK mobile customers would have had less choice and paid higher prices as a result of the takeover, and that the deal would have harmed innovation in the mobile sector.
- The 3.4 GHz band has been included as part of a wider 3.4-3.8 GHz band identified by the European advisory body, the Radio Spectrum Policy Group, as the “primary band suitable for the introduction of 5G use in Europe”.
- Ofcom has set reserve prices of £10m per 10 MHz lot of the 2.3 GHz band, and £1 million for a 5 MHz block in the 3.4 GHz band. These are unchanged since Ofcom’s Statement in October 2015, giving a total reserve price of £70m for the 190 MHz of spectrum to be awarded.
- The auction is designed to be fair and transparent, enabling the spectrum to be awarded to those who can put it to the most efficient use in the best interests of consumers. Ofcom proposes to auction the spectrum in lots of 10 MHz for the 2.3 GHz band and 5 MHz for the 3.4 GHz band.
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