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Auction off of MoD spectrum should attract mobile network operators, says Ofcom

Mobile network operators are likely to be interested in buying access to radio spectrum owned by the Ministry of Defence (MoD), Ofcom has said.

The telecoms regulator said the 40MHz of spectrum within the 2.3GHz band and 150MHz of spectrum within the 3.4GHz band that it is to auction off on the MoD's behalf would be likely to be attractive to MNOs because of the "particular characteristics of the spectrum". It said the spectrum is likely to be used to deliver mobile broadband services.

The auction could happen before the end of 2015, Ofcom said.

In its consultation, Ofcom said that it could intervene in the result of the auction (188-page / 1.57MB PDF) to ensure that MNOs do not own too high a proportion of the available spectrum that it would pose a risk to competition in the mobile broadband market.

"On balance, our provisional conclusion is that some competition measures are justified in the 2.3/3.4 GHz auction because if we did not take any measure there would be a risk to competition," Ofcom said. "Whilst this is low in terms of likelihood, it could be significant for consumers if it were to materialise. We propose that there should be an overall cap in the auction on the amount of mobile spectrum that may be held by one company of 310 MHz. This is a level proportionate to the level set ahead of the 800 MHz and 2.6 GHz award (approximately 37%)."

"We believe it is appropriate in order to prevent a single operator from obtaining a very large share of spectrum. That is, it would impose some constraints on the amount of spectrum that EE and Vodafone could obtain in the auction, but still allow them considerable flexibility. Our view is that more interventionist options are not justified, because the risk that they could prevent outcomes that might be beneficial for consumers outweighs our competition concerns," Ofcom said.

According to the consultation, which closes on 23 January 2015, the spectrum being auctioned off would still be continued to be used by the MoD in "a very few specific areas".

In February 2013, Ofcom announced the results of a radio spectrum auction it conducted to help telecoms operators deliver '4G' services. The term '4G' is generally used to refer to mobile broadband services delivered using mobile broadband technologies such as Long Term Evolution and WiMAX.

Vodafone, Everything Everywhere (EE), Telefónica (O2), Hutchison 3G (Three) and Niche Spectrum Ventures (a BT subsidiary) spent more than £2.3 billion between them in acquiring the spectrum for the purposes of delivering 4G services.

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