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LONDON (Alliance News) - UK telecoms regulator Ofcom has tabled proposals which would bar BT Group PLC from being able to bid for immediately available 4G mobile spectrum in its upcoming auction, in an effort to remedy competition concerns.
Ofcom will auction 190 megahertz of spectrum in the 2.3 gigahertz and 3.4 GHz bands next year, an increase of just under a third of the total mobile spectrum currently available, and more than three-quarters of the level it auctioned in 2013.
This includes 40 MHz of spectrum on the 2.3 GHz band, which is already supported by mobile devices, meaning that this spectrum could be used to immediately expand capacity for a mobile network operator.
Meanwhile, it will auction 150 MHz of spectrum for the 3.4 GHz band, which is not currently used by most mobile devices, but is likely to be useable by future devices in the coming years, and is expected to be central for the roll-out of next generation 5G connectivity across Europe.
Ofcom said it will apply a cap of 255 MHz on "immediately useable" spectrum any one operator can buy. As a result of this, BT Group's EE mobile business, acquired early this year, will not be able to bid for any spectrum in the 2.3 GHz band.
BT/EE currently holds 45% of immediately useable UK mobile spectrum, Ofcom noted, compared to 28% for Vodafone Group PLC, 15% for O2 UK, and 12% for Three.
Ofcom said is it concerned that if these immediately usable holdings become more "unbalanced", this could harm competition in the UK mobile market in coming years. If BT/EE were to acquire all of the 2.3 gigahertz spectrum being awarded, Ofcom noted it would have almost half of the immediately usable spectrum in the market.
As a result of the new spectrum in the market after the auction, Ofcom noted that BT/EE's overall share of immediately-usable spectrum will fall to 42%.
It has not proposed a similar cap for the 3.4 GHz spectrum as this is not immediately usable, and Ofcom said it believes it is important operators are given an opportunity to acquire this spectrum "so they are able to consider early development of 5G services".
Ofcom has set reserve prices of GBP10.0 million per 10 MHz lot of the 2.3 GHz band, and GBP1.0 million for a 5 MHz block in the 3.4 GHz band, giving a total reserve price of GBP70.0 million for the 190 MHz of spectrum to be auctioned.
At the last 4G spectrum auction in 2013, Ofcom raised GBP2.34 billion for the Treasury from the sale of a total of 250 megahertz of spectrum, lower than the GBP3.5 billion that had been forecast by the Office for Budget Responsibility and spurring criticisms of then Chancellor George Osborne, who had included GBP3.5 billion worth of receipts from the auction in his Autumn Statement the previous December.
Ofcom said that, unlike in the previous auction, it is not proposing coverage obligations on the winning bidders in this auction, as the frequencies being sold are best suited for delivering greater network capacity, not achieving wide geographic coverage.
"Spectrum is the essential resource that fuels the UK's economy. This auction can help ensure that UK consumers can access the mobile data services they need, and that operators can continue to innovate and build for the future," said Philip Marnick, Ofcom's spectrum group director.
"The UK has long benefited from strong mobile competition. We are designing the auction to ensure everyone benefits from a market that continues to innovate and serve them well," he added.
Ofcom also said demand for mobile data is expected to rise considerably in coming years and, as a result, it will release more spectrum for mobile use in the future.
Shares in BT were down 0.4% at 361.35 pence Monday afternoon, whilst Vodafone was down 0.8% at 203.32p.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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