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Ofcom reaps £1.4bn from mobile spectrum auctions for 4G and 5G networks

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Operators have spent £1.4bn in Ofcom’s latest round of mobile spectrum auctions to buy up bandwidth for expanding their 4G services and laying the groundwork for upcoming 5G networks.

The UK’s four operators, namely EE, Vodafone, 3 and O2, all bid varying amounts to secure bandwidth in the 2.3GHz and 3.4GHz bands, in auctions run by the communications regulator Ofcom.

While 2.3GHz is usable by current smartphones to expand 4G capacity for today’s mobile users, the 3.4GHz chunk will be earmarked for future 5G networks which could launch as early as next year.

The amounts spent by each operator are as follows:

  • EE won 40MHz of 3.4 GHz spectrum at a cost of £302,592,000
  • Hutchison 3G UK (3) won 20MHz of 3.4GHz spectrum at a cost of £151,296,000
  • Telefónica UK (O2) won all 40MHz of 2.3GHz spectrum available, at a cost of £205,896,000 and 40 MHz of 3.4 GHz spectrum at a cost of £317,720,000
  • Vodafone won 50MHz of 3.4GHz spectrum at a cost of £378,240,000
  • Airspan Spectrum Holdings also bid in the auction but failed to win spectrum in either band

In total the auction raised £1,355,744,000 for the Treasury, significantly less than was raised in previous spectrum auctions.

In 2000 the UK auctioned off its 3G spectrum raising a colossal £22.5bn from the operators at the time.

Many telecoms experts later speculated that the sizeable amount spent at this auction limited the amount of money available for spending on infrastructure that was necessary to achieve widespread 3G coverage.

It also took a while before they saw significant returns on their investment as some of 3G’s most touted features, like video calling, never saw as widespread adoption as anticipated.

Early 2013 saw the launch of the UK’s 4G spectrum auctions with bids reaching just £2.3bn, a mere fraction of the money raised from the 3G auctions although still bringing in more cash than today’s sale.

Ofcom will now move to the ‘assignment’ stage, which is the last bidding stage of the auction. This is a short process, which allows companies who have won spectrum in the principal stage to bid to determine where in the frequency bands their new spectrum will be located.

After the end of the assignment stage, it will issue the winning bidders with licences to use the relevant spectrum within a few days, allowing them to begin putting it to use.

Philip Marnick, spectrum group director at Ofcom said: “This is good news for everyone who uses their mobile phone to access the internet. As a nation we’re using ever more mobile data on smartphones and mobile devices. Releasing these airwaves will make it quicker and easier to get online on the move. It will also allow companies to prepare for 5G mobile, paving the way for a range of smart, connected devices.”

5G network are expected to launch in some markets by the end of this year or early next year. The new technology is slated to open up opportunities for a range of technologies that 4G networks are not suitable for. 

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