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October 26, 2015

Ofcom sets date for MoD spectrum auction

News: Mobile operators can buy as much spectrum as they want.

By Alexander Sword

Ofcom‘s auction of spectrum currently held by the Ministry of Defence will take place in early 2016.

The regulator announced that 190 MHz spectrum in the 2.3GHz and 3.4GHz bands will be made available as part of a Government initiative called the Public Sector Spectrum Release programme to free up public sector spectrum for commercial use.

There will be no cap on the amount of spectrum that operators can buy under Ofcom’s proposals, which are under consultation until 27 November. This is because a cap might discourage bidders from buying large chunks of adjacent spectrum.

The 3.4 GHz spectrum will be sold in blocks of 5 MHz and the 2.3 GHz spectrum in blocks of 10 MHz.

Ofcom has proposed a reserve price of £10m for a 10 MHz 2.3 GHz lot and £1m for a 5 MHz 3.4 GHz lot, meaning that this is the minimum price it will accept.

These bands are particularly suited to providing mobile broadband such as 4G services, as they can carry large amounts of data.

The 2.3 GHz band is being used for 4G in countries such as China, India and Australia, while the 3.4 GHz band is already being used in the UK as well as Canada and Spain.

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Kester Mann, Principal Analyst at CCS Insight, said that this will be an important moment in the battle over the UK’s data services.

"The auction of crucial spectrum will likely be hard fought as it is vital for operators to meet the demand of surging data usage in the UK.

"The timing of the auction – early 2016 – could be complicated given that the outcome of at least one major M&A deal (3 buying O2) may not have been concluded by the time the process begins."

While the lack of the cap is "good news for incumbent providers," says Mann, "the auction could still generate interest from new players, especially given rapid moves in the UK towards multi-play. This could see Sky for example come in as a wildcard bidder."

It could also be an important auction for incumbents that missed out during the 2013 spectrum auction, such as O2.

"O2 missed out on the 2.6 Ghz spectrum at the 4G auction in 2013 (it did purchase 800 MHz frequencies), so this could be important for them from a capacity perspective," Mann told CBR.

 

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