British Operators Pay £1.4bn For 5G Spectrum

Ofcom has announced the winners of its spectrum auction, which will enable British mobile operators to offer 5G services in the years ahead.

The five bidders for spectrum were Airspan Spectrum Holdings Ltd, EE Ltd, Hutchison 3G UK Ltd, Telefónica UK Ltd, and Vodafone Ltd.

The action of airwaves – or spectrum – was in two frequency bands, namely 2.3GHz (4G) and 3.4GHz spectrum (5G).

Spectrum winners

On the face of it, it seems that the biggest winner of the entire process has been O2, which managed to secure 40MHz of spectrum in the 2.3 GHz band. This is a band that is already supported by current 4G devices and can be used immediately after release.

But it was the auction of 150 MHz of spectrum in the 3.4GHz band that prompted the most interest, as although these airwaves are not compatible with most current mobile devices, they are key for the roll out of 5G services across Europe.

Airspan Spectrum Holdings did not win any spectrum, but the big four paid more than expected to secure additional spectrum.

EE Ltd won 40 MHz of 3.4 GHz spectrum at a cost of £302,592.

Hutchison 3G UK Ltd (Three) won 20 MHz of 3.4 GHz spectrum at a cost of £151,296, and Vodafone won 50 MHz of 3.4 GHz spectrum at a cost of £378,240.

But it was Telefónica UK Ltd (O2) who analysts said did the best out the big four.

It won all 40MHz of 2.3 GHz spectrum available, at a cost of £205,896; and 40MHz of 3.4 GHz spectrum at a cost of £317,720.

This means that the government and the treasury netted an impressive £1.4bn from the auction. This is more than analysts had been expecting, but less than previous auctions.

For example, the auction of 4G spectrum in 2013 only raised £2.3bn, about £1.2bn less than the Treasury had forecast. This prompted an investigation from the National Audit Office into what went wrong.

And these sums are far less than the heady heights of the early 2000s, when the Government had expected to gain £5bn for its 3G spectrum auction, but in the end finished with a whooping £22.5bn.

What next

Ofcom said it would now move to the ‘assignment’ stage, which is the last bidding stage of the auction.

“This is a short process, which allows companies who have won spectrum in the principal stage to bid to determine where in the frequency bands their new spectrum will be located,” said the regulator.

At the end of the assignment stage, Ofcom will issue licences to use the relevant spectrum.

“This is good news for everyone who uses their mobile phone to access the internet,” said Philip Marnick, Spectrum Group Director at Ofcom. “As a nation we’re using ever more mobile data on smartphones and mobile devices. Releasing these airwaves will make it quicker and easier to get online on the move. It will also allow companies to prepare for 5G mobile, paving the way for a range of smart, connected devices.”

Ofcom also said it was “requiring mobile companies to extend their networks as more airwaves are released next year,” and it is making it easier for companies to install masts.

In addition to extending coverage, Ofcom is legalising ‘mobile repeaters’ – devices that help boost mobile reception in people’s homes.

Ofcom had to overcome legal challenges from both Three (Hutchinson) and BT/EE over a spectrum cap.

This was because Ofcom wanted to limit any single operator to 255MHz of ‘immediately usable’ spectrum (that is 800MHz, 900MHz, 1400MHz, 1800MHz, 2100MHz and 2.6GHz) and 340MHZ of all airwaves available in the UK – an overall cap of 37 percent each.

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