14 February 2018
| Alan Burkitt-Gray
The UK is likely to press ahead with an auction for spectrum for 4G and 5G services in the next few weeks following a court decision.
The Court of Appeal in London finally rejected a bid by
Three last night for a 30% spectrum cap to be imposed on any
bidder. A spectrum auction is likely to begin in April and some
of the spectrum will become available shortly after.
Telefónica’s O2 UK, which two years ago was
trying to merge with CK Hutchison’s Three UK,
said: "We welcome today’s decision to reject
Three’s appeal. It is now imperative that we move
forward and hold the auction as soon as possible."
Ofcom, the UK regulator, said: "We welcome this decision, and
will now press ahead with releasing these important airwaves.
This new capacity will allow mobile companies to offer more
reliable reception, and to prepare for future 5G
Last month Ofcom set out its rules and timetable for the
auction – warning at the time that the schedule might
be disrupted by the appeal court.
Two chunks of spectrum will be auctioned, said Ofcom in
January. "Licences for use of the 2.3GHz band (2350-2390MHz)
and the 3.4GHz band (3410-3480MHz and 3500-3580MHz) will be
conducted via an auction. The 2.3 and 3.4GHz spectrum is likely
to be used by mobile network operators to deliver additional
capacity for mobile broadband. The 3.4GHz spectrum may be used
for 5G services."
Ofcom has imposed a total cap of 37% on how much any one
operator may hold at the end of the auction, a move opposed by
BT, which owns EE, today the largest spectrum holder with 45%.
BT last year went to court to try to block any move for a cap,
but lost its attempt in December.
At the same time the High Court told Three it was wrong to ask
for a 30% cap – and that decision was held up by
yesterday’s Court of Appeal decision. So the 37%
cap will stand.
Ofcom will now start the process of formally qualifying the
bidders – though it has already been in touch with
companies likely to take part.
The Financial Times has reported that Virgin Media, which has a
mobile virtual network operation on EE infrastructure as well
as a substantial broadband cable operation, will take part.
Otherwise bids are expected from all four infrastructure-based
operators, EE, O2, Three and Vodafone.
The outcome of the auction, which is expected to start in
April, will be crucial to the future of O2 in the UK.
Telefónica is known to want to float its shares but it
cannot start that process – or negotiate a sale to any
other operator, such as Virgin Media – until it knows
how much spectrum it will have.