After a number of false starts the UK is almost ready to fire the starting gun on its 5G spectrum auction — paving the way for faster mobile internet in the country.
The UK court of appeal yesterday rejected mobile operator Three’s appeal against industry regulator Ofcom’s 5G spectrum auction rules.
In September 2017, Three and BT-owned EE launched separate judicial reviews of the auction rules.
Three argued that the 37 percent cap on the amount of spectrum an individual operator can hold following the auction was too high — it wanted to cap to be 30 percent — while EE argued that there should be no cap.
BT currently controls the most mobile spectrum, around 42 percent. Vodafone has 29 percent, while Three hold 15 percent and O2 has 14 percent.
In December 2017, the UK High Court dismissed both challenges on the basis Ofcom had done the necessary research and sufficiently modelled how different caps would affect the auction.
EE accepted this decision saying at the time:
[We are] pleased the court has reached a decision so quickly and are now looking ahead to investing in the best mobile experience across the UK.
However, despite experiencing criticism from Ofcom and other mobile phone operators, such as Vodafone and O2, about the delay this would cause to the roll out of 5G compatible spectrum, Three announced it would appeal the High court’s decision.
The appeal was predicated on Three’s claim that a more just distribution of spectrum was necessary for both UK consumers and the digital economy.
The appeal has now been rejected the UK Court of Appeal.
Ofcom’s auction includes 40MHz of 2.3GHz spectrum and 150MHz of 3.4GHz spectrum. The former will provide operators with extra capacity for existing networks. The latter will be crucial for the future roll out of 5G in the UK.
What was said:
An Ofcom spokesperson said:
The Court of Appeal has very firmly rejected Three’s application for permission to appeal on all grounds. We welcome this decision, and will now press ahead with releasing these important airwaves. This new capacity will allow mobile companies to offer more reliable reception, and to prepare for future 5G services.
Our priority has always been to release these airwaves as soon as possible so customers can get more reliable phone reception.
We are disappointed by the Court decision but our decision to appeal was the right one. First of all this has not caused any delay to the delivery of 5G services to UK consumers which are not expected to roll out until 2019/20, according to Ofcom. But more importantly, our appeal is about competition in the UK mobile market and spectrum distribution is the single biggest factor in maintaining a competitive market.
Ofcom is now much clearer that a 37 percent cap is the level they believe is appropriate to maintain competitive balance. It is vital that Ofcom, as a minimum starting point, sticks to this number when additional spectrum is auctioned off.
We still believe that a 37 percent cap is too high if the policy objective is to have a competitive four player market and we would like to see it set at a lower level in the future.
O2 UK welcomed the ruling, saying:
It is now imperative that the industry does everything possible to avoid further delays to the spectrum auction.
What this means:
The UK court of appeal’s ruling in Ofcom’s favour means that the auction of the high capacity spectrum can go ahead.
It is expected to occur in early April laying the groundwork for the introduction of 5G to the UK by 2020.
Applications from auction participants are starting to be processed by Ofcom. The participants include the four major mobile operators, EE, Vodafone, O2 and Three, as well as Virgin Media.
This auction is only the first in a number of lots to increase the amount of high capacity spectrum that is commercially available.
Ofcom moved to auction off high capacity spectrum in preparation for 5G networks becoming commercially available in the UK. These bands were previously exclusively used by the Ministry of Defence but the government has freed them up for civil uses.
Ofcom previously auctioned off spectrum for 4G network use in 2013.
The auction was originally supposed to go ahead in 2016 but it was delayed due to a proposed merger between Three and O2 which was later blocked.
Ofcom published its rules for the auction of 190 MHz of both 2.3GHz and 3.4GHz spectrum bands in July 2017.
The 2.3GHZ band can be used immediately by operators to provide extra capacity for their existing 3G and 4G networks.
The 3.4GHZ band is not compatible with most current devices meaning it cannot be used immediately. However, the availability of the band to operators will be crucial for the future roll out of 5G devices and networks.
Ofcom’s rules placed two limitations on bidders. The first was no operator will be able to hold more than 255 MHz of 2.3GHz immediately usable spectrum following the auction.
The second was that no operator will be able to possess more than 340MHz of the total spectrum following the auction, which is equivalent to 37 percent of all mobile spectrum expected to be usable in 2020.
The motivation behind the caps was to ensure the industry remained competitive as all operators could develop 5G services.
Ofcom have set reserve prices for the spectrum auction at £10m per 10MHz of 2.3GHz spectrum band and £1m per 5MHz of 3.4Ghz. This puts the total for the 190MHz being auctioned at £70m.