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Legal challenge threat to 5G spectrum auction

Out-Law News | 16 Mar 2020 | 10:27 am | 2 min. read

The threat of legal challenge could delay the '5G' spectrum auction due to take place in the UK this spring, according to the regulator that will oversee the auction process.

Ofcom published its finalised rules for how its auction, for spectrum in the 700 MHz and 3.6-3.8 GHz bands, will work late last week. It confirmed that those rules could be subject to legal challenge and that this could impact the timeframe for holding the auction.

"We are aware that during the course of our consultation process, a number of stakeholders have indicated that they might consider seeking judicial review of our final decisions," Ofcom said in a statement.

"In light of the fact that a significant part of this spectrum could be used now to provide services, we consider that any claim for judicial review should be brought promptly, with a request that the courts expedite the matter. We consider that promptness in this case means that any claim for judicial review should be brought within six weeks of the date of this statement," it said.

"We have also published a final draft of the Auction Regulations which will give effect to our decisions. We intend to make the Auction Regulations once we are certain that stakeholders will either not seek to challenge the decisions set out in this statement, or any such challenges have been disposed of. The Auction Regulations will come into force after we formally make them – we will specify the date of entry into force in the final Regulations. Once the Regulations are in force, we will publish details of when and how potential bidders may apply to participate in the auction," Ofcom said.

Technology law expert Simon Colvin of Pinsent Masons, the law firm behind Out-Law, said: "The 5G auction is a major milestone for the UK in terms of the future of telecoms and data-related services. It is not surprising that Ofcom perceives a risk of challenge given the competitive desire for spectrum for the next generation. It will be interesting to see how the process plays out, particularly given the more collaborative signs we have seen with the mobile network operators (MNOs) in the single rural network programme."

According to Ofcom's finalised rules for the auction, three of the UK's four largest mobile network operators (MNOs) will face a cap on the amount of spectrum they will be able to acquire.

Of the 200 MHz of spectrum being made available, 80 MHz is within the 700 MHz band and 120 MHz within the 3.6-3.8 GHz band. BT/EE will be able to acquire a total of up to 120 MHz of the spectrum being made available in the auction, while the volume of spectrum Three and Vodafone will be able to acquire will be capped at 185 MHz and 190 MHz respectively.

The caps have been applied by Ofcom in an effort to ensure no one MNO in the UK holds more than 37% of spectrum available for providing mobile services at any one time. O2 will not be restricted by a cap in the forthcoming auction.

Ofcom has also confirmed that MNOs that are successful in the auction will not be subject to mobile coverage obligations as part of their licences to use the spectrum. The regulator had considered applying such obligations but has dropped the idea after the UK's four largest MNOs reached a landmark mobile coverage agreement with the UK government which will extend both the geographical scope and depth of coverage available in the country currently.

"These infrastructure-sharing commitments are capable of delivering better outcomes for consumers than we would be able to require through coverage obligations in the spectrum auction," Ofcom said. "In particular, the creation of a rural network based on voluntary infrastructure sharing will reduce the costs of providing coverage, allowing more comprehensive coverage to be delivered."