Last week, Ofcom published consultation papers on competition issues and proposed regulations relating to the forthcoming auction of spectrum licences in the 2.3 and 3.4 GHz bands, including that bandwidth released by the Ministry of Defence as part of the government's Public Sector Spectrum Release (PSSR) program, established in 2010.
Ofcom's objectives are to make the spectrum available quickly to meet consumer demand for mobile broadband services with higher speeds and greater capacity, and to ensure that the provision of mobile services creates a competitive market from which consumers and businesses can benefit.
With ever growing demand for mobile broadband to support increased mobile data consumption, due mostly to the popularity of smartphones (71% of adults in the UK having at least one smartphone), there is an urgent need for greater capacity. Making more frequencies available is a key mechanism for supporting growth in mobile data, and the auctioned spectrum will increase the total amount available to mobile operators by 29% - increasing available bandwidth from 647 MHz to 837 MHz.
Whilst the 2.3GHz band can be used immediately (as it is already supported by devices), the 3.4 GHz band is not currently supported by mainstream devices. Its utility will most likely not be realised for a couple of years, when it is anticipated to support the initial deployment of 5G networks.
Up for auction are: (i) four 10MHz lots in the 2.3GHz band between 2350 MHz and 2390MHz; and (ii) thirty 5 MHz lots in the 3.4GHz band within 2410-2600MHz range. The application stage will require the submission of details of existing spectrum holdings of the applicant and various parties and a deposit of £100,000.
At present there are four mobile network operators (MNOs) serving the UK market: BT/EE (holding 45% of the spectrum), Vodafone (holding 28% of the spectrum), O2 (holding 15% of the spectrum) and H3G (holding 12% of the spectrum). Ofcom has some reservations about the asymmetry in the amount of spectrum held by the different MNOs, and worries that current levels of competition will reduce as the demand for services increase, especially within the 2.3 GHz spectrum which is available for immediate use.
Ofcom has therefore proposed the Wireless Telegraphy (Licence Award) Regulations 2016 to implement some conditions in connection with the award of the 2.3 and 3.4 GHz spectrum, including a proposed cap of 255MHz on successful bidders' post-award spectrum holdings within the 2-3 GHz band.
The proposed regulations also include new rules relating to the withdrawal of bids, which would mean that if the spectrum remains unallocated as a result of the withdrawal, then it will be offered to the withdrawer for double the price (which they will have the choice to refuse). If refused however, the bidder will be liable to pay the single price without allocation of the spectrum. This is intended to act as a deterrent from using withdrawals to manipulate the bidding process.
Ofcom will complete the awards process with the publication of the names of all the licensees and details of the frequency ranges on the Ofcom website.
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