Ofcom, the UK’s communications regulator, today announced that it will launch a 5G spectrum auction in the 700 MHz and 3.6 GHz to 3.8 GHz frequency ranges on March 12, 2021. Four wireless carriers will be bidding in the auction, which include BT Group (owns EE), CK Hutchison (owns Three UK), Telefónica (owns O2 UK), and Vodafone.

Ofcom 5G Spectrum Auction – Overview

Low-Band – 700 MHz

Firstly, in the 700 MHz frequency, known as low-band, Ofcom is releasing 80 MHz of spectrum depth. Notably, of this 80 MHz of spectrum depth, 60 MHz is paired, and 20 MHz is unpaired (i.e., downlink-only). For the 60 MHz of paired spectrum, Ofcom has set a total reserve price of £600m. Additionally, for the 20 MHz of unpaired spectrum, Ofcom has set a total reserve price of £4m.

Mid-Band – 3.6 GHz to 3.8 GHz

Secondly, in the 3.6 GHz to 3.8 GHz frequencies, known as mid-band, Ofcom is releasing 120 MHz of spectrum depth. Initially, the 3.6 GHz to 3.8 GHz spectrum has been set by Ofcom with a total reserve price of £480m.

Key Takeaways

Overall, the auction licenses, which have a term of 20 years, have a total reserve price of £1.1bn. Upon completion of this auction, the total amount of spectrum available for wireless carriers in the UK will increase by 20%.

Ofcom is not including any coverage obligations to increase connectivity in the UK’s rural areas, as part of this auction. However, Ofcom is imposing a spectrum cap of 37% of total holdings for the wireless carriers.

Auction Bidding Stages Set by Ofcom

Ofcom’s March 2021 5G spectrum auction in the UK will have two bidding stages, including the: i) Principal Stage and ii) Assignment Stage.

Principal Stage

Firstly, the principal stage, takes place over multiple rounds. In each round, prices go up with bids, and the bids determine how much spectrum each wireless carrier acquires. Pricing for the principal stage begins with all spectrum lots available at the reserve price.

If demand for the available spectrum lots is greater than, or equal to, the amount of spectrum available, then the price for each frequency band goes up in the next round. Indeed, bidders will then bid at the new, higher price, which is set by Ofcom.

Finally, the principal stage ends when there are no new bids in a round. At this point, the winning bidders will know how much spectrum they have won in the auction.

Assignment Stage

Secondly, the assignment stage, takes place over a single round. This stage determines the precise frequencies of the airwaves won by each bidder.

5G Spectrum in the United Kingdom

Today’s announcement for the March 2021 auction in the 700 MHz and 3.6 GHz to 3.8 GHz frequency ranges is the UK’s second major 5G auction. Specifically, this follows Ofcom’s successful licensing of 150 MHz of 5G spectrum depth in the 3.4 GHz to 3.6 GHz frequency ranges in April 2018. Indeed, this auction ended with £1.2bn of total spend from the UK’s four wireless carriers.

High-band (millimeter wave) spectrum is also expected to be auctioned in the UK in 2021. Specifically, Ofcom is expected to auction the 26 GHz band, which covers 3.25 GHz of spectrum depth in the 24.25 GHz to 27.5 GHz frequency ranges.

Adam Simmons is the Founder & CEO of Dgtl Infra. He started his career with an S&P 500-listed big box retailer, in an operations management role. Adam's entrepreneurial "itch" led him to start a 5G-driven company, focused on innovative retail solutions using augmented reality and shoppable videos, which was eventually sold to an advertising and consulting group. After, realizing the potential of 5G, Adam shifted his efforts towards investing in the "building blocks" of 5G - known as digital infrastructure, completing a number of strategic investments, buying cellular towers, data centers and fiber networks.

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