Ofcom has rejected calls by some operators for the upcoming auction of 5G spectrum to be abandoned in favour of an allocation process and will invite bids for the airwaves in January 2021.
The auction will see 80MHz worth of 700MHz spectrum and 120MHz of 3.6-3.8GHz frequencies made available for 5G networks. This amounts to an 18 per cent increase in the amount of spectrum available to operators
The process has already been delayed by the coronavirus pandemic but a number of networks have voiced concerns.
O2 had opposed the two stage element of the auction. The principal stage will see participants bid for separate lots of spectrum and assignment stage will determine specific frequencies. Operators will be able to negotiate between themselves so that their new spectrum is adjacent to existing frequencies. O2 wanted spectrum to be harmonised in contiguous blocks to avoid this process.
Vodafone had gone one step further and called for an administrative process rather than an auction. Last month, the UK government banned operators from buying telecoms equipment from Huawei by the end of the year and also told them to strip out existing 5G kit made by the company by 2027.
Nick Jeffrey, Vodafone UK CEO, said the ruling would consume financial and technical resources that could have been spent on network infrastructure. The government has not indicated that any financial support will be forthcoming to compensate operators for additional expenses incurred. However Jeffrey believes a different approach to spectrum allocation could help mitigate some of the costs.
Rather than ‘bidding’ for spectrum, Vodafone proposes operators would be given a share of airwaves in exchange for the reserve price. This would reduce the cost of spectrum – helping operators but reducing the revenue generated for the treasury.
While other countries use a spectrum allocation model, the government’s approach to auctions is much more pragmatic than the heady days of the 3G era. There is still belief that an auction ensures a fair value for a public resources, there is increased recognition that the indirect benefits of mobile connectivity to the economy are greater than the direct financial gain of licences.
Ofcom told operators that there was no administrative process that would satisfy its obligations to maximise the potential of a scarce resource like spectrum. It added that its priority was never to maximise revenues, nor does it have the power do this.
“Demand for getting online on the move is soaring, and the pandemic has only increased the importance of mobile services to people and businesses,” said Philip Marnick, Ofcom’s Spectrum Group Director. “Releasing these airwaves promptly will bring a much-needed capacity boost, helping mobile customers get a better service.”