5G UK Auction
Updated: 11th June, 2018
5G is still over a year away from commercial availability and in preparation Ofcom has auctioned off additional spectrum that will be ideal for the next generation of mobile networks, with another auction planned for a later date.
We’ve put together a guide to everything you need to know about the 5G auctions, from what frequencies have been and are being sold off, to how much each network has won and more. More information about the specifics of the different frequencies can be found in our guide to 5G Frequencies in the UK.
5G Spectrum Auction Results Summary (5th April, 2018)
|Operator||2.3Ghz Spectrum Won||3.4GHz Spectrum Won|
|Note: The 3.4GHz spectrum band here actually refers to spectrum ranging from 3.4GHz – 3.6GHz, with different operators acquiring spectrum across different parts of the band. Below we’ll detail exactly what spectrum each network acquired.|
Ofcom’s first 5G spectrum auction was completed in April 2018, with EE, O2, Vodafone and Three all winning some spectrum.
O2 acquired the most, winning all 40MHz of the 2.3GHz spectrum that was being auctioned (paying £205,896,000), as well as 40MHz of 3.4GHz spectrum (for which it paid £317,720,000). Its 40MHz of 3.4GHz spectrum covered the 3500MHz – 3540MHz part of the band.
Vodafone meanwhile won 50MHz of 3.4GHz spectrum, paying £378,240,000, specifically acquiring the 3410MHz – 3460MHz part of the band.
EE paid £302,592,000 for 40MHz of 3.4GHz spectrum (covering 3540MHz – 3580MHz), and Three acquired the least, paying £151,296,000 for 20MHz of 3.4GHz spectrum, specifically the 3460MHz – 3480MHz range. However, the network already held 40MHz of 3.4GHz spectrum (specifically 3480MHz – 3500MHz and 3580MHz – 3600MHz).
In total, Ofcom auctioned 190MHz of high capacity spectrum in the 2.3GHz and 3.4GHz bands, comprising 40MHz in the 2.3GHz band and 150MHz in the 3.4GHz band.
That amount is equivalent to roughly three-quarters of the spectrum auctioned by Ofcom at the 4G spectrum auction in 2013 and will increase the spectrum available for mobile devices by nearly a third. Spectrum in these bands is well suited to 5G, as it can carry large amounts of data.
What will the auctioned spectrum be used for?
The 2.3GHz spectrum will be available for immediate use by operators to provide extra capacity for their existing networks. The band is already supported by mobile devices from the likes of Apple and Samsung.
The 3.4GHz spectrum is not compatible with most current devices and will be used for the rollout of 5G networks. It has been identified as central to 5G rollout across Europe.
Post Auction Operator Spectrum Holdings (4G and 5G)
|Operator||Immediately useable||3.4GHz Held||Total Spectrum Held|
|Three||90MHz||60MHz (40MHz of which was already held)||150MHz|
|Note: Three also holds 84MHz of 5G spectrum (for future use subject to relocation by Ofcom) of the 3.6GHz and 3.8GHz the company purchased from UK Broadband back in 2017.|
The 5G spectrum auction results leave EE in the strongest position, despite it not acquiring as much spectrum as O2 or Vodafone, as it already had so much more than rivals.
It had 255MHz before the auction and its total now is 295MHz, as it won 40MHz of the 3.4GHz band – though this new spectrum won’t be immediately useable.
Vodafone has the second most, just as it did before the auction. Previously it had 176Mhz and now, having won 50MHz of 3.4GHz spectrum, it has 226MHz – though as with EE, the new spectrum isn’t immediately useable.
O2 was the big auction winner but still only has the third most spectrum overall. That’s an improvement though, as it was in last place with 86MHz and it now has 166Mhz (thanks to having purchased 40MHz of 2.3GHz spectrum and 40MHz of 3.4GHz spectrum), with 126Mhz of that being immediately useable, so it’s the only network that could immediately benefit from the auction results.
Three on the other hand has arguably gone from third place to last in spectrum holdings. It previously had 130Mhz of spectrum (of which 90MHz was immediately useable) and now has 150Mhz, having purchased just 20Mhz of 3.4GHz spectrum – and none of that new spectrum can be used on its 4G network.
It’s a surprising result from Three, which had campaigned hard for a 30% cap on the amount of spectrum each network could have, and which we’d have thought would be looking to make up for having its takeover of O2 blocked.
Having said that, it’s worth noting that thanks to its takeover of UK Broadband Three has more spectrum that’s ideally suited to 5G than any other network, and once the final 84MHz of that is relocated by Ofcom it will actually have 234MHz of spectrum, putting it in second place for spectrum holdings overall. That network claims that this makes it the best placed network in the UK for early 5G leadership.
The upshot is that all the networks now have more spectrum than they did, and all now look a lot more prepared for 5G, but while O2’s position has been solidified, Three’s has been weakened.
What spectrum is still to auctioned?
At a separate auction, Ofcom plans to auction 116Mhz of spectrum in the even higher bandwidth 3.6GHz – 3.8GHz bands, as well as in the 700MHz band.
There may yet be additional auctions beyond this, as Ofcom has identified the 26GHz band (24.25-27.5GHz) as the next priority for global harmonisation, which, along with the 37-43.5 and 66-71GHz bands, it plans to put forward for use at WRC-19 (World Radiocommunications Conference 2019). That doesn’t take place until late October 2019, so don’t expect any auctions for that spectrum until sometime after that, if at all.
What was the spectrum previously used for?
The 2.3GHz – 3.4GHz spectrum was previously used by the Ministry of Defence, but has been freed up by the government to make it available for civil uses. This is part of a wider government initiative to release or share 500MHz of spectrum for civilian use by 2020.
Some 3.4GHz spectrum is used for 4G wireless broadband, such as by Relish in London, which is now owned by Three following its acquisition of UK Broadband.
The spectrum in the 3.6GHz – 3.8GHz bands is partially in use by fixed links and satellite services, but Ofcom is aiming to auction off unused spectrum in those bands, hopefully without impacting those services.
The 700MHz band is used by Freeview television and wireless microphones. The government has contributed £500-600 million to clearing the spectrum, a process which began in March 2017 with the reconfiguration of a digital terrestrial television (DTT) transmitter in Selkirk. There’s a lot to be done to move DTT to the 470-690MHz spectrum and making alterative spectrum available for wireless microphones.
When will further auctions be held?
The 3.6GHz – 3.8GHz and 700MHz band auctions are currently expected to take place in 2020. Any auctions for other spectrum will happen sometime after that, but there’s no news on when yet.
2017 auction rules
Ofcom published its final rules for the 2.3GHz and 3.4GHz auction in July 2017, designed to reflect recent market developments and safeguard competition now and in the future.
The rules imposed two restrictions on bidders to limit the amount of spectrum dominant operators could win:
- No operator would be able to hold more than 255MHz of immediately usable spectrum, i.e. in the 2.3GHz band, following the auction.
- No operator would be able to hold more than 340MHz of the total amount of spectrum following the auction, equivalent to 37% of all the mobile spectrum that is expected to be useable in 2020. This includes spectrum available in the completed auction and in the 700MHz band.
By imposing a cap on the overall amount of spectrum Ofcom hoped to satisfy competition concerns while enabling all operators to develop 5G services, hence there was no limit on the amount of 3.4GHz spectrum a company can hold.
Ofcom wasn’t proposing any coverage obligations on the winning bidders like it did with the 4G auction in 2013. That’s because the provision of these latest frequencies is more about boosting network capacity than expanding network coverage.
What did the caps mean for bidders?
The caps meant that EE was not able to bid for spectrum in the 2.3GHz band and was able to win a maximum of 85MHz of 3.4GHz spectrum (though in reality it only came away with 40MHz), as before the auction it had around 45% of the UK’s immediately useable spectrum.
Vodafone was able to win a maximum of 160MHz of spectrum across both bands – a cap it didn’t come close to.
There were no restrictions on the amount of spectrum O2, Three or indeed any other bidder could win.
What did the spectrum cost?
Ofcom auctioned the spectrum in lots, with reserve prices of £10m per 10MHz lot of 2.3GHz spectrum and £1m for a 5MHz block in the 3.4GHz band. This gave a total reserve price of £70m for the total 190MHz of spectrum that was auctioned.
In practice, the costs went a lot higher than that. As noted above, O2 paid £205,896,000 for 40MHz of 2.3GHz spectrum, and 317,720,000 for 40MHz of 3.4GHz spectrum.
Vodafone paid £378,240,000 for 50MHz of 3.4GHz spectrum, EE paid £302,592,000 for 40MHz of 3.4GHz spectrum, and Three paid £151,296,000 for 20MHz of 3.4GHz spectrum. The total auction spend across all networks was £1,355,744,000.
Costs for future spectrum auctions remain to be seen, but expect them to be similarly high.
What will be the rules for future auctions?
The first spectrum auction will be nowhere near enough to satisfy the need for high speed mobile broadband, let alone 5G.
Auctions of further spectrum are currently expected to be held in 2020, and Ofcom won’t publish rules for those until much nearer the time. Those rules will take into account the competitive landscape and spectrum holdings of the operators at that time, and may include further caps on the amount of spectrum operators can win.
However, Ofcom has indicated that licences for 700MHz spectrum to be auctioned will include obligations to ensure improved rural coverage.
All the winners of the 2018 spectrum auction have now been assigned their spectrum and assigned licences, allowing them to start using it. That’s most notable for O2, as it won all the immediately useable 2.3GHz spectrum and can now begin using it with its network. The other networks will likely have to wait for the launch of 5G to start using their winnings.