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Ofcom chief defends decision to cap spectrum auction

Ofcom chief executive Sharon White has defended the telecoms regulator's decision to put a limit on the amount of mobile spectrum an operator can control, after legal action was launched by two companies.03 Oct 2017

Writing in the Financial Times (registration required), White said commercial interests should not derail “a golden opportunity” for the UK to be one of the world's best-connected countries. 

Three and BT/EE have launched judicial review against Ofcom's July announcement that it was capping the overall amount of spectrum, or mobile airwaves, which any one mobile network operator (MNO) can win. The auctions for spectrum to support 4G and 5G mobile networks were due to take place this year, but are now expected to be delayed due to the upcoming court hearing in December. 

White said Ofcom will defend the cap in court. In July Ofcom said no MNO would be allowed to hold more than 255 MHz of "immediately useable spectrum" following the auction, and no operator would be allowed to hold more than 340 MHz of the total spectrum that will be available at the conclusion of the auctions.

The cap prevents BT/EE from bidding for spectrum in the 2.3 GHz band, used for 4G mobile, as it already holds 255 MHz of usable spectrum. It would be able to bid for up to 85 MHz of spectrum in the 3.4 GHz band. The operator has lodged a judicial review against the cap.

Conversely, Three has launched legal action because it wants a stricter cap on the amount of spectrum an MNO can own.

White said the legal action would slow down the introduction of 5G and delay benefits to users, as companies would not be able to start laying the groundwork for the new networks.

Telecoms expert Daryl Cox of Pinsent Masons, the law firm behind Out-Law.com, said the spectrum bands were strategically important for UK operators.

“Ofcom was between a rock and a hard place when setting the auction rules,” Cox said. “It is unlikely that these judicial review claims will materially delay the roll-out of 5G. Ofcom has indicated that the spectrum of interest for 5G won’t be cleared and available until approximately 2020 and there are other relevant spectrum awards to come, although the battle for 5G spectrum is definitely on.

“There needs to be a clearer focus in the future on other drivers of growth and efficiency in the mobile sector. For instance, it is widely thought that a functioning secondary market for spectrum is required in the UK, and a more permissive spectrum access and sharing policy, to bring the UK closer to the US model. These factors will mitigate the competitive risks faced by mobile operators of centrally controlled award processes,” Cox said.