5G spectrum auction opens
Bidding has begun on the auction of two distinct portions of spectrum within the 2.3GHz frequency band (which supports 4G mobile) and the 3.4GHz frequency band (which supports 5G mobile).
Participating in the auction are all four current mobile network operators (MNOs) in the UK – EE, O2, Three and Vodafone – and a new player in the mobile market, Airspan Spectrum Holdings. The latter is a subsidiary of a US-based telecommunications company and has recently bought a significant portion of the Irish mobile spectrum.
The five companies are in competition to buy from a total of 190MHz of spectrum split into 34 separate lots. Telecoms regulator Ofcom is auctioning the spectrum portions to both support the existing 4G mobile network and establish the backbone of the future 5G mobile network.
The two-stage auction could last from several days to several weeks, depending on how much demand there is for the 34 lots on auction.
Philip Marnick, Ofcom’s Spectrum Group Director, said: “Our job is to release these airwaves quickly and efficiently, and we want to see them in use as soon as possible. We are glad the auction is now underway. This spectrum will help improve people’s experience of using mobile broadband today and help companies prepare for future 5G services.”
Ofcom has established a reserve price of £10m for each of the four 10MHz lots in the 2.3GHz frequency band and £1m for each of the 30 5MHz lots in the 3.4GHz frequency band, thereby setting £70m as the minimum that the regulator will receive from the auction.
A similar auction in 2012 for lots in the 4G spectrum netted £2.34bn, which was below the amount expected by the Government. However, Ofcom noted that its obligation is to ensure the efficient management of the mobile spectrum and not to maximise revenue from the auction.
Currently, the 3.4GHz spectrum designated for 5G mobile networks is not compatible with any devices sold in the UK market, but this should change during the next year, as many major companies are debuting new smartphones that should help 5G launch commercially in the 2020s.
The availability of 5G will improve data speeds on smartphones and tablets, and it will also make more bandwidth available to support the billions of web-enabled devices that form the Internet of Things.
Commenting on the 5G spectrum auction, Adrian Baschnonga, Global Lead Telecommunications Analyst at consultancy EY, said: “The spectrum auction launching today will benefit operators by both supporting current mobile broadband offerings and laying the foundations for 5G rollout in the future. There is still plenty of debate surrounding the use cases for 5G, and this auction will provide an early sign of industry demand for the frequencies required to support it, ahead of more auctions next year and beyond.”
Ofcom plans to auction spectrum in the 700MHz frequency band in the latter half of 2019, but the launch is contingent on the improvement of 4G coverage. The regulator plans to attach coverage obligations to a portion of the licences that it awards in that band, requiring that winners improve mobile coverage in rural sections of the country.