Ofcom plans new 4G and 5G spectrum auctionOfcom plans new 4G and 5G spectrum auction

The auction is not imminent. Ofcom has been working on this proposed sale for a few years and it seems unlikely it will get it off the ground until the back end of the year at the earliest. But it's something for the UK's mobile operators to start thinking about in earnest.

Specifically, Ofcom has just opened a consultation into various elements of the planned frequency sale, including the proposed auction design and the terms of the spectrum licences, including dealing with possible interference with satellite services. But it has stated that it will not sort out the competitive assessment element of the planned sale until after any spectrum trading associated with the Vodafone/Three UK merger has taken place.

That likely takes us until mid-year. Vodafone and Three have long been shooting for a first half 2025 completion date and at the former's third-quarter results announcement on Tuesday CEO Margherita Della Valle said she expects it to close "in the next few months." Ofcom's auction consultation, meanwhile, runs until 25 April.

The regulator has 25 MHz of spectrum to offload in the upper 1.4 GHz band. Vodafone and Three UK already hold frequencies in the central part of that band, while the adjacent 1.5 GHz band is used by Inmarsat for the satellite to earth segment of some mobile satellite services on maritime vessels and aircraft, as well as on land (see chart below).

Ofcom is leaning towards auctioning the airwaves via a sealed bid single round auction, with a second price rule, where winning bidders pay fees based on the second highest bid.

Operators will be able to bid for the frequencies in question, which will carry a reserve price of £1 million per 5 MHz, in different-sized packages, ranging from the lower 5 MHz block only to the whole 25 MHz block.

That seems to be a compromise solution based on operator responses to Ofcom's previous request for input into the planned auction. BT/EE and Virgin Media O2 said they would prefer to bid for single block, while Vodafone and Three UK preferred smaller lot sizes, the difference in opinion doubtless coming as a result of the operators' existing holdings, or lack thereof, in the block.

Similarly, Ofcom notes that the auction format, as opposed to a multiple-round ascending auction, like a clock format, would be operationally and administratively simpler for both itself and for bidders, as well as levelling out the playing field with regard to the valuations bidders might place on the spectrum based on their existing holdings.

It will also consult on its plans to avoid disruption to Inmarsat's satellite receivers. In this case it appears to be coming down on the side of the overall mobile industry. It will protect Inmarsat from interference, but only for a short period, around five years, rather than a longer 20-year period. And after that five years it will be up to any affected ships or airlines to replace or upgrade their Inmarsat receivers as necessary.

None of this is set in stone as yet; industry stakeholders will still be able to have their say. But the regulator has been working on this for some time and seems pretty clear in its intentions.

This is supplementary downlink spectrum and not a huge amount of it at that; we're not talking about a headline-grabbing mega-auction. But these airwaves could be valuable to the player or players that acquire them.

"We expect that if mobile network operators deploy the upper block of the 1.4 GHz band in their networks, consumers will see improved coverage, speeds and performance in locations where coverage relies on low frequency spectrum – for example indoors, at the edges of macrocells and in rural areas," Ofcom said in its consultation paper.

This auction will generate some interest.