The UK spectrum auctions are over – but what happens now? Here’s what we know so far….
The six spectrum bidders became five and then four as UK national regulator Ofcom announced the outcome of the principal stage of the 2.3 GHz and 3.4 GHz spectrum auction.
All four of the nation’s existing mobile network operators secured new frequencies: that’s Telefonica UK (O2), Vodafone UK, EE and 3 UK. Airspan Spectrum Holdings participated in the auction but won none of the frequencies auctioned. O2 was the biggest spender – and winner – buying all the 2.3 GHz spectrum (for LTE) and a large share of the 3.4 GHz spectrum (for 5G). O2 acquired 42% of all spectrum auctioned, but the best news for the operator is probably the 2.3 GHz spectrum win. This will allow O2 to deploy far more LTE mobile broadband capacity in the most challenging dense urban areas.
The amount spent at this auction ranged from just over £150 million to just under £525 million per operator – most of was spent on 3.4 GHz band earmarked for 5G. The total value raised in the principal stage is over £1.3 billion.
In the next stage the winners bid to determine where in the frequency bands their new spectrum would be located. This – the final bidding stage – was followed by Ofcom issuing licences to winning bidders and the announcement of the final auction results. In fact O2 is already using some of its spectrum.
So is that it in relation to this auction? Not really. The most fundamental question – was it money well spent? – remains to be answered as no one knows for sure how the 5G business model will work for operators.
Also, what does it mean in terms of competition? Firstly, uneven distribution of spectrum in the UK became slightly better. The difference between the MNO with the maximum amount of spectrum below 6 GHz (EE) and the minimum (Three) has been reduced; all MNOs now have at least 150 MHz of spectrum below 6 GHz. Three is now the operator with the smallest amount of spectrum (155 MHz).
And here we come to another positive outcome for O2: 2.3 GHz spectrum is immediately usable. That is, the band – 40 MHz of which O2 won – is supported by mainstream mobile devices. One potential use for the 2.3 GHz band is as a source of additional capacity for areas where congestion could be an issue. The winners of 3.4 GHz band spectrum will probably have to wait until the ecosystem – including end user devices – is established. This could take a while: in fact it might be a few more years before 3.4 GHz spectrum owners can benefit.
There are other challenges too – for Ofcom and the bidders – such as understanding the complexities associated with the 5G performance in the various frequencies – in terms of radio propagation, penetration in buildings and reuse of spectrum. At the same time, of course, the UK regulator and operators want to move quickly; they don’t want to be left behind.
There’s another point that needs to be made in relation to the UK auctions. The recent 700MHz auction consultation offers a new opportunity – if regulators, MNOs and third party suppliers put more effort and thought into the investment required to comply with the different licence conditions that should be applied to that auction. Admittedly in the last auction no discernible conditions were applied to the 3.4GHz spectrum that the MNOs bought. Thus the 700 MHz auction may be the last chance in a long time for the regulator to impose conditions in a way that will actually deliver usable services to the majority of the UK landmass.
And we at Real Wireless think these may not be the only challenges associated with these chunks of spectrum. Why do we feel qualified to suggest this? Mainly because we have long been heavily engaged in various areas of the international 5G programme through many projects and research activities. Our knowledge extends across challenges both technological and economic – from radio planning for deployment to managing infrastructure costs, and from assessing device availability to examining new business models (most recently through our work on network slicing). And, of course, we have worked with, and for, a number of regulatory bodies and governments.
In other words, the 5G story is still developing. Our work has been part of that developing story and, given the wide variety of expertise we can offer and the work that still remains to be done bringing 5G to market, we suspect it will continue to be for some time to come.
Our congratulations to the UK auction winners, of course – but this story is still in its very early stages.