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Ofcom Set Late 2015 Auction for 2.3GHz and 3.4GHz Mobile Broadband Bands

Friday, November 7th, 2014 (9:43 am) - Score 1,886

The national UK telecoms regulator has today confirmed that it plans to conduct an auction of spare radio spectrum in the 2.3GHz and 3.4GHz bands during late 2015 or early 2016, which is most likely to be snapped up by mobile operators (e.g. Three UK, Vodafone, O2 and EE) for use in the delivery of 4G (LTE) based Mobile Broadband connectivity.

The spectrum, which was formerly used by the Ministry of Defence (MoD) and is now being repurposed, includes 40MHz in the 2.3GHz band (2350MHz to 2390MHz) and another 150MHz will come from the 3.4GHz band (3410MHz to 3600MHz).

Officially “no specific uses for this spectrum have been prescribed“, although mobile operators are the primary target. Other countries already use the 2.3GHz band for exactly this purpose (e.g. Apple iPhone 5 / 6, HTC Desire and Samsung Galaxy are already compatible with 2.3GHz). Meanwhile UK Broadband Ltd. (Relish) uses a different slice of 3.4GHz in the UK for its fixed wireless 4G network.

4g_auction_radio_spectrum_bands_2016

Both bands are fairly high frequency and so would struggle to travel as far as the lower frequency ones (e.g. 800MHz and 900MHz). Never the less high frequency bands are usually better at carrying a lot of data, which can make them especially useful in urban areas where the demand for data is usually strongest.

Philip Marnick, Ofcoms Spectrum Group Director, said:

Today marks an important step in ensuring that the UK has sufficient spectrum to support our wireless economy. It comes in response to the fast pace of change and innovation taking place in the communications sector, which is placing increased demands on how spectrum is used by all industries. One important way of meeting this demand is making new spectrum available and its use as flexible as possible.”

As usual Ofcom claims that its auction will be “fair and transparent“, with the spectrum being awarded to “those who can put it to the most efficient use and in the best interests of consumers“. The regulator proposes to auction the spectrum in 38 lots of 5MHz, while bidders will be able to request a minimum bid of four lots per band.

A “safeguard cap” has also been introduced to limit operators’ mobile spectrum holdings to 37% of relevant spectrum (this overall spectrum cap will include the newly-auctioned spectrum). Ofcom has also proposed a Reserve Price of between £2.5m to £5m per lot for the 2.3GHz spectrum, and £1m for the 3.4GHz spectrum. The total value of the proposed reserve prices would be between £50 and £70m.

Previous auctions have tended to be beset by legal and competition squabbles between the major mobile operators, although such issues are unlikely to blight the process this time around as there appear to be fewer competing interests. Never the less Ofcom has said that its consultation will remain open until 23rd January 2015 and the responses will surely reveal if any problems are likely to crop up.

On the other hand the Government’s recent move to force mobile operators into adopting a controversial National Mobile Network Roaming policy (here) might yet cause problems for the process, although technically the roaming policy only applies to 2G and the above spectrum is intended for 4G and possibly future 5G uses.

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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3 Responses
  1. Avatar DTMark says:

    Given the governments’ recent antics regarding forcing sharing of infrastructure, the most satisfying thing to see now would be for all the bidders to get together, put in a single bid destroying the price the bands could fetch by removing bidding altogether, and then share it amongst themselves as they see fit.

    1. Mark Jackson Mark Jackson says:

      Ofcom’s approach wouldn’t appear to allow that without prior approval and the roaming policy only applies to 2G, while these bands are for 4G and beyond. Never the less I can see potential for mobile operators to use the auction as some sort of bargaining chip.. but we’ll see.

    2. Avatar Steve Jones says:

      Such an approach would, of course, be illegal.

      However, in general you are right. If companies bid for an asset on the basis it gives them a commercial advantage, they are likely to value it muck lower if they are later forced to wholesale the service at cost-orientated prices.

      It’s quite amazing to think that the 3G auctions raised £22.5bn in the UK and £30bn in Germany. Of course what followed was a horrendous telecoms crash as the myth of ever-rising telecoms shares collapsed under the realisation of the real financial implications. Also, that money was not re-invested. It was just dumped into public coffers to finance current expenditure. The 3G auction was also existential for some operators which is why bids were driven ruinously high.

      Personally I’m inclined to the view that auctioning spectrum in this way is not very efficient. Granting monopolies on a public asset in return for a payment might raise large sums in the short term (although how large that sum is now doubtful), but the income is “lumpy” and increases risks as it requires a large up-front expenditure with uncertain return.

      Personally, I’d prefer a system that maximised the efficiency of investment (and coverage) and the state gaining revenue through the taxation of usage. Maybe a system based on time-limited franchises by area for providing wholesale services with the definition of what those services are set by users of the service.

      Nb. the above is not appropriate to all parts of the spectrum, but it seems to fit with mobile voice/internet services.

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