Ofcom announces 700 MHz and 3.6-3.8 GHz auction with no coverage obligations

UK telecoms regulator Ofcom has announced that the next tranche of 5G frequencies will be made available to operators via an auction next year.

The spectrum consists of 80 MHz of 700 MHz band and 120 MHz in 3.6-3.8 GHz band. The 700 MHz is a lot more valuable to operators because it covers much greater distances than the higher frequency spectrum. Thus Ofcom is proposing a reserve price of up to £240 million per 2×5 MHz lot of that, compared to a reserve price of up to £25 million for each 5 MHz lot of 3.6-3.8 GHz spectrum. Four lots of 5 MHz of 700 MHz spectrum will also be auctioned for downlink-only.

The big news within the announcement is that Ofcom isn’t attaching any coverage obligations to any of the spectrum, apparently as a result of the deal struck with operators last week. Were it not for that the 700 MHz spectrum was expected to only be offered on the condition that whoever owned any of it committed to the kinds of arbitrary geographical coverage obligations that have become do politicised in recent years.

“We’re pressing ahead with plans to release vital airwaves to improve mobile services for customers,” said Philip Marnick, Spectrum Group Director at Ofcom. “Together with mobile companies’ commitments to improve coverage, this will help more areas get better services, and help the UK maintain its place as a leader in 5G.”

The mechanics of the auction will be similar to the 2018 one, which brought in an acceptable amount of cash for the government so it presumably felt no need to change it. The 37% cap on spectrum ownership still applies, which means EE can only win a maximum of 120 MHz, Three 185, and Vodafone 190. O2 has so little spectrum that it could buy the lot if it felt like it (see below). The auction will take place sometime next Spring.