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Ofcom’s Next UK 5G Auction Faces Legal Challenge from O2

Tuesday, May 5th, 2020 (8:06 am) - Score 2,263

Mobile operator O2 (Telefonica UK) is today in the news for a second time this week after they issued a “letter before claim” (legal challenge) against Ofcom’s forthcoming auction of the 5G (ultrafast mobile broadband) friendly 700MHz and 3.6-3.8GHz radio spectrum bands, which demands more harmonisation of the spectrum.

Legal challenges against mobile auctions are of course nothing new in the United Kingdom and they often cause significant delays (the early 4G auctions were set back by years). The Government has since tweaked the rules to make Ofcom’s job of tackling such challenges easier, but operators frequently come up with new ways to highlight weaknesses or concerns with the regulator’s plans.

Mobile connectivity is an aggressively competitive environment and radio spectrum is the lifeblood that drives it. Often the more spectrum you control, the better your position (improved coverage and data speeds etc.), which makes it easy to understand why such auctions can be so contentious.

Ofcom’s latest 5G auction has already faced some challenges due to disputes over spectrum caps and the associated coverage obligation, which has since been dropped in favour of the new £1bn industry-led Shared Rural Network plan (i.e. extending geographic 4G mobile coverage to 95% of the UK by the end of 2025).

Telefonica’s New Legal Challenge

Unfortunately the regulator, which recently asked if any operators planned to disrupt the next auction by issuing a “letter before claim“, now faces a new problem after O2 responded by doing exactly that. According to the FT (paywall), the operator wants Ofcom to harmonise the lots of spectrum so that they are contiguous blocks, rather than being sold as fragmented slices.

The reason for this is because 5G works best when it has access to a large 100MHz+ block of contiguous spectrum frequency, which at present is something that only Three UK can field. Ofcom intends to make this possible for other operators via their forthcoming auction and that solution involves a secondary ‘assignment stage‘, which is a final round of bidding to determine the specific frequencies that winning bidders will be allocated.

In other words, winners of 3.6-3.8GHz spectrum will have an opportunity to negotiate their placements within the band amongst themselves. “This will make it more straightforward for bidders to join together the new spectrum they win with their existing holdings, and potentially reduce the level of ‘fragmentation’ in the wider 3.4-3.8 GHz band,” said Ofcom last year.

NOTE: Ofcom will auction off 24 lots of 5MHz (120MHz in total) of 3.6-3.8GHz spectrum – reserve price of £20m per lot.

However, O2 argues that this approach creates a lot of complexity and risk for mobile operators, some of which may well walk away with smaller blocks than others (i.e. leaving them in a weakened position). But the alternative of requiring Ofcom to set who can get what arguably opens the regulator up to even more challenges from those who may disagree with their decisions.

A Spokesperson for Ofcom said:

“People and businesses need fast, reliable mobile services more than ever, so we want to auction these airwaves as soon as possible. We’re really disappointed that one operator has threatened to launch a legal dispute that could slow things down for mobile users and the economy.”

As it stands Ofcom’s auction plans already seem to be stuck in limbo due to the current COVID-19 (Coronavirus) crisis, which has forced them to delay a lot of their plans for 2020/21. The 5G auction was previously targeted to start in Q1 2020/21 (spring), but under the revised plan this has now been listed as 2020/21 (i.e. it could happen at any point over the next 12 months).

We suspect that, given the existing delay, Ofcom may feel as if it has less to lose by simply fighting O2’s challenge and resolving that as quickly as possible. By comparison any fundamental changes to the auction structure at this stage could open up a new can of worms.

Leave a Comment
4 Responses
  1. Avatar tim

    Rightly so! It is stupid to sell in 5Mhz chunks when that’ll only deliver 4G like speeds.

    The awarded spectrum needs to be continuous chunks of 20Mhz at least.

    IIRC 3.6Ghz is TDD (non-paired) unlike other LTE bands that are FDD and have separate downlink and uplink frequency. Therefore 40Mhz un-paired is equivalent to 20Mhz paired!

    Can 5G modems connect to multiple bands at the same time like LTE-A can? Or is this something not available in first-gen 5G? If available how many bands at a time. LTE-A is currently 5 bands (5AC).

  2. Avatar arundel

    Certainties in life: death, taxes and o2 objecting to anything ofcom wants.

    • In fairness you could probably replace O2 in that sentence with any of the other operators too. Mind you the operators would probably say that Ofcom is far from perfect itself.

  3. Avatar Yvonne Hargreaves

    I have been with BT Cellnet,Cellnet then O2 for 27 years in total! For over 6 weeks now people from Land lines cannot contact me ! (Engaged drop tone) is received when dialling my number! I’ve reported it to O2 on two occasions… The movement to ‘Faceless’ companies is very poor when you need to talk! Mobile companies are highly lucrative, they should have a Call Centre. The idea of technology is to make life easier-not to be talking to web-pages and gain no clarity-only on repeated call and only a robot advising an increase to my bill! I’m now looking to move.

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