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UK Carriers begin 5G spectrum bidding

Auction will see EE, O2, Three, and Vodafone all compete for spectrum

The UK’s second 5G spectrum auction is due to begin today, with Ofcom confirming that EE, O2, Three, and Vodafone are all participating. This is the first phase in the two-phase process, in which the carriers will compete for individual lots of spectrum, with the second phase relating to the specific positions of the spectrum blocks being awarded.  

The spectrum being made available is 80MHz in the 700MHz band, which has been cleared over the last four years by its previous users in the digital terrestrial TV and wireless microphones, as well as 120MHz of spectrum in 3.6–3.8 GHz band.

Both of these bands are relatively attractive prospects for the carriers; 700MHz spectrum has a wide range, making them ideal at improving coverage, especially outdoors, while the 3.6–3.8GHz band can be considered the principle 5G band, allowing for the high speeds and low latency connections expected from 5G. 

The reserve prices for each spectrum block are £1 million for each of the four 5Mhz blocks of downlink-only 700MHz spectrum, £100 million for each of the six 5Mhz blocks of paired 700MHz spectrum, and £20 million for each of the 24 5MHz blocks in the 3.6 GHz-3.8 GHz band. 

The only major restriction for the carriers is that none of them can ultimately hold more than 37% of the total spectrum, which limits the carriers to varying degrees, but is not likely to significantly affect the bidding. 

Overall, this auction will increase the total spectrum available to the UK carriers by around a fifth and is expected to raise over £1.1 billion. 

Most of the UK carriers , notably excluding Three, have bemoaned the non-contiguous nature of their spectrum holdings, arguing that Ofcom should step in to help them defragment their spectrum holdings as part of this auction. The regulator, however, has said that this is beyond its remit, and instead expects the carriers to arrange spectrum trades amongst themselves in order to maximise the value of the available spectrum. 

This auction in fact comes after some minor delays caused by the coronavirus, the advent of which actually saw some of the UK’s carriers argue that Ofcom should simply allocate the available spectrum at the reserve price. Once again, Ofcom rejected these pleas, arguing that there was no feasible way for them to simply allocate the spectrum quickly, efficiently, and fairly in light of their duties.

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