Networks to vie for mobile spectrum in GBP70m Ofcom auction

Mobile networks are expected to splash the cash in an expensive battle early next year to ensure they keep their share of mobile market in the UK, with the last similar auction drumming up £2.3bn for the government.

The spectrum auction was originally scheduled by regulator Ofcom for 2015, although the delay means it will not come after the decisions have been made on BT Group's acquisition of EE and the O2-Three deal. A preliminary ruling on the BT-EE deal is expected on Wednesday this week.

Ofcom said that it planned to auction off a total of 190 megahertz (MHz) of high-capacity spectrum in two bands – 2.3 gigahertz (GHz) and 3.4 GHz - in early 2016.

These higher-frequency bands of spectrum, which have been made available as part of a government initiative to free up public sector spectrum for civil uses, are particularly suited for high-speed mobile broadband services as they can carry large amounts of data.

The telecoms watchdog has set a total reserve price of £70m, with a reserve price of £10m for a 10 MHz block in the 2.3 GHz band and £1m for a 5 MHz block in the 3.4 GHz band.

Back in 2013, 50 rounds of bidding for 250 MHz of spectrum resulted in a total of £2.3bn spent by five bidders: Vodafone bought £791m, EE £589m, Telefónica £550m, Hutchison 3G £225m and BT £187m.

“Spectrum is the essential resource which fuels the UK’s wireless economy," said Philip Marnick, Ofcom's spectrum group director.

“We’re responding to rapid change and innovation in the communications sector, which is placing greater demands on spectrum. Part of our plan to meet this demand is by making new spectrum available and allowing it to be used in a number of different ways.”

Tthere will not be a cap on the amounts bidders can buy, Ofcom said, as it believes capping could prevent a bidder from buying large blocks of adjacent spectrum.

Large blocks have the potential to support very fast download speeds, meaning even faster mobile broadband for consumers, which helps pave the way for 5G.

Many existing mobile handsets from major manufacturers, including the Apple iPhone 6, HTC Desire and Samsung Galaxy, are already compatible with the 2.3 GHz spectrum band, which is so far being used for high-speed 4G mobile broadband networks in ten countries outside Europe, including China, India and Australia.