The regulator set out the rules for the 700MHz and 3.6–3.8GHz award, for which it will not impose coverage obligations due to MNOs’ commitment to the Shared Rural Network.
Background: Ofcom auctioned 5G spectrum for the first time in April 2018, when it awarded 150MHz of airwaves in the 3.4–3.6GHz band. All the four MNOs obtained spectrum in that auction, which raised a total £1.2bn. Later in that year, it started the process for the award of the 700MHz and the 3.6–3.8GHz bands.
A two-stages auction: On 13 March 2020, Ofcom finalised the rules for the 700MHz and 3.6–3.8GHz auction. The award will involve two stages. In the ‘principal stage’, participants first bid for separate lots to determine how much spectrum each company wins. An ‘assignment stage’ then follows, where a round of bidding determines the specific frequencies that each winner will be allocated. To allow MNOs to create continuous blocks of 5G-ready spectrum, winners of 3.6–3.8GHz spectrum will be able to negotiate their placements within the band among themselves.
Yes to a spectrum cap, no to coverage obligations: Ofcom is not imposing caps specific to the individual bands in this auction. However, it will continue to impose a 37% cap on the overall spectrum that any one mobile company can hold across all bands, as it did in the previous award. Following the agreement between Government and MNOs for the Shared Rural Network, Ofcom will not attach coverage obligations to the licences.
The threat of judicial review is looming: Ofcom is aware that some operators might seek judicial review of its final decision. Since a significant part of this spectrum could be used now, Ofcom hopes that any claim for judicial review be brought within six weeks. At a recent briefing for analysts, Three voiced its concerns about the fact that it is the only operator whose annual licence fees (ALFs) may be linked to the auction prices, and said an ALF link would give it a strong incentive not to bid for 3.6GHz, thereby distorting the results and potentially costing the Treasury £840m. Three has asked Ofcom to clarify that its ALFs will not be revised after the auction, or to commit to review ALFs of spectrum in the 900MHz band based on the 700MHz price.
