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Ofcom sets out conditions for auctioning off 4G and 5G spectrum

A limit will be placed on the amount of spectrum BT/EE and Vodafone will be able to acquire when the UK's major mobile network operators compete later this year for the right to access radio waves to deliver '4G' and '5G' services.

UK telecoms regulator Ofcom confirmed (89-page / 810KB PDF) that an overall cap will apply on the amount of spectrum the two companies will be able to hold when it auctions off spectrum in the 2.3GHz and 3.4 GHz frequency bands.

Ofcom confirmed its previous plans to prohibit BT/EE from winning any of the new spectrum being made available in the 2.3 GHz band during the auction. It said an "overall cap" will also apply and restrict the amount of spectrum BT/EE will be able to buy in the auction for spectrum in the 3.4 GHz band, as well as the overall amount Vodafone will be able to acquire across the two auctions.

No restrictions will be applied to the amount of spectrum that either Three or O2, the other two of the four largest UK mobile network operators, will be able to acquire in the auctions, the regulator said.

The 40 MHz of spectrum being made available within the 2.3 GHz band is immediately useable and is likely to support 4G services, while the remaining 150 MHz that will be auctioned is not immediately useable but is expected to support 5G connectivity in future.

When setting its caps for the forthcoming 2.3 GHz and 3.4 GHz spectrum auctions, Ofcom said it took into account the fact that a further 80 MHz of spectrum will be awarded in 2019 when the auction for frequency in the 700 MHz band is due to take place.

The caps are justified on competition grounds, it said.

According to Ofcom figures, BT/EE currently holds 255 MHz of "immediately useable spectrum". Vodafone holds 176 MHz, Three 90MHz, and a further 40 MHz that will become useable in 2020, and O2 holds 86 MHz.

The regulator said no MNO will be allowed to hold more than 255 MHz of "immediately useable spectrum" following its auctions this year, and that no operator would be allowed to hold more than 340 MHz of the total spectrum that will be available at the conclusion of the auctions.

Ofcom said: "The cap has the effect of limiting BT/EE to winning a maximum of 85 MHz of new spectrum (all of it in the 3.4 GHz band). Vodafone could win an additional 160 MHz (in either the 2.3 or 3.4 GHz bands). There will be no restriction of the amount of spectrum [Three], O2 or any other bidder could win in this auction."

Ofcom confirmed it has set reserve prices for the spectrum it is auctioning off this year. It said reserve prices of £10 million per 10 MHz lot of the 2.3 GHz band, and £1m for a 5 MHz block in the 3.4GHz band, will apply.

The regulator said it is likely to invite applications from potential bidders in the auction in late September or early October this year. Bidding in the auction is scheduled to take place in late October or November, it said.

Philip Marnick, Ofcom’s spectrum group director, said: "Spectrum is a vital resource that fuels the UK’s economy. We’ve designed this auction to ensure that people and businesses continue to benefit from strong competition for mobile services. We want to see this spectrum in use as soon as possible. With smartphones and tablets using even more data, people need a choice of fast and reliable mobile networks. These new airwaves will support better services for mobile users, and allow operators to innovate and build for the future."

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