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Ofcom raises £1.356bn in principal stage of new 5G spectrum auction

After announcing their plans to extend and improve basic 4G connectivity around the country, the UK’s mobile operators are celebrating their principal gains in the 5G arena with low-band and mid-band spectrum

UK comms regulator Ofcom has revealed that principal stage bidding has now ended for the 200MHz of 5G spectrum that it put up for auction, with the swift conclusion of the auction and the relatively modest overall spend of just of £1bn being seen as good news for maintaining the UK’s 5G development.

Four companies – EE , Hutchison 3G UK (owner of the Three UK network), O2 parent Telefónica UK and Vodafone – took part in the principal stage of the auction for spectrum that was split across two bands – 80MHz of spectrum in the so-called low-band at 700MHz, and 120MHz of spectrum in 3.6-3.8GHz mid-band.

In the 700MHz range, there was 2x30MHz of paired frequency spectrum and 20MHz of supplementary downlink spectrum. The 700MHz airwaves are ideal for providing wide-area, rural and in-building coverage. The latter GHz airwaves are part of the primary band for 5G, capable of boosting use cases where data capacity is a critical component as well as latency and throughput.

Airwaves were split into 34 “lots” for bidding and Ofcom has revealed that the total revenue raised was £1.356bn. The spectrum acquired has a 20-year licence term through to 2041.

BT-owned mobile operator EE won 2x10MHz of paired frequency spectrum in the 700MHz band at a cost of £280m, 20MHz of supplementary downlink spectrum in the 700MHz band at a cost of £4m, and 40MHz in the 3.6-3.8GHz band at a cost of £168m.

For Three UK, Hutchison 3G picked up 2x10MHz of paired frequency spectrum in the 700MHz band at a cost of £280m.

O2 owner Telefónica won 2x10MHz of paired frequency spectrum in the 700MHz band at a cost of £280m, and 40MHz in the 3.6-3.8GHz band at a cost of £168m.

Vodafone gained 40MHz in the 3.6-3.8GHz band at a cost of £176.4m.

Kester Mann, director of consumer and connectivity at analyst CCS Insight, said the swift conclusion of the auction and the relatively modest overall spend was good news for UK 5G. “The UK was fast out of the blocks with early 5G launches in 2019, but progress has been hindered by the government ban on Huawei,” he said. “Winning prized 700MHz spectrum was particularly important to EE and Three. Both were lagging in low-band frequencies, which are best suited to achieving wide-area, rural and in-building coverage.

“With the smallest holding coming into the auction, O2 will be pleased to scoop both low-band and mid-band spectrum. Its 33% increase in frequencies will be crucial to support the more than 35 million customers that use its network. Three was the only operator not to secure any spectrum in the 3.6-3.8 GHz band, but it still holds an enviable position in mid-band spectrum following its acquisition of UK Broadband in 2017.”

Telefónica described its share as “significant” and said the allocation demonstrated the company’s continued commitment to the UK 5G market and the “very best” connectivity for customers. “We are delighted with the result, which secured the right spectrum at a fair price,” O2 said in a statement. “This additional spectrum will allow for continual improvement in our network.

“We pride ourselves on being a champion of reliability and quality coverage and look forward to continuing to invest in digital infrastructure to build Britain’s connectivity, for the benefit of all.”

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Three UK, which has already been deploying 700MHz-capable 5G technology on sites, described its gains as a fantastic result for not just the company but also its customers, for whom indoor coverage experiences would be transformed, it said.

“We are delighted to have won two 10MHz blocks of low frequency spectrum at the auction,” said Three CEO Robert Finnegan. “This triples the amount of low-frequency spectrum we own and will have a transformative effect on our customers’ experience indoors and in rural areas. Coupled with our existing low-frequency spectrum and the UK’s largest 5G spectrum holding, we are in a fantastic position to deliver a great network experience for our customers now and in the future.”

Vodafone, which now holds 90MHz of 3.4-3.6GHz spectrum, said the new spectrum acquired will enable it to significantly expand its 5G network capacity and concentrate on select bands that support certain use cases, meeting the growing demand for fast, reliable, high-quality data services.

“This auction will boost our 5G network capacity,” said Vodafone UK chief executive Ahmed Essam. “It means we will have the spectrum we need to further the roll-out of 5G to our customers, bringing high-speed connectivity and opening up new opportunities for products and services. We have been successful in the 3.6GHz band and have avoided expenditure on low-band spectrum, where it is our strategy to refarm over time our significant 900MHz holdings to carry 5G traffic.”

EE described its purchase as an excellent outcome for the company and its customers, enabling it to drive improved customer experience and help support its future efforts to deliver “industry-leading” innovation. “EE has secured vital new spectrum in this auction which, when rolled out into the network, will allow us to grow our position as the UK’s number one 5G network,” said Marc Allera, CEO of BT’s Consumer Business. “EE was first to launch 4G and 5G, and this auction outcome is great news for our network, our customers and BT.”

The auction will now move to the “assignment” stage, which involves a single bidding round in which the companies can bid for the frequency positions they prefer for the airwaves they have secured in the principal stage.

Ofcom said that after submitting their assignment stage bids in the 3.6-3.8GHz band, bidders will then have the opportunity to negotiate the frequency positions among themselves – if they want to join together the airwaves they have secured with spectrum they already hold in the wider 3.4-3.8GHz band. This will depend on whether the companies want to enter the negotiation period.

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