What does the Ofcom 5G auction mean for the UK mobile industry?

After months, even years, of speculation and legal action, the first phase of Ofcom's 5G spectrum auction has finally ended.

The £ 1.4 billion raised for the Treasury was a small fraction of the huge sums generated by the infamous 3G Auction of 2000 and less than the £ 2.3 billion paid in the 2013 sale, but this was even more than the initial estimates.

It seems that all concerned will be happy with the result, despite the judicial drama that preceded the process. But what does it mean for the UK market?

O2 gets more capacity

O2 maybe had more to lose in this auction. In 2013, it gained 20MHz of the 800MHz spectrum that would form the basis of its 4G network, but none of the 2.6GHz radio waves is at stake. The old band offers a wide range, but lacks the 2.6GHz capacity, which means that O2 was at a potential disadvantage when it comes to densifying networks in urban areas.

The operator owned by Telefónica had ruled out suggestions that this was a problem in the past, preferring to focus on the industry's favorite complaints about site access and planning permission, but the argument has now stopped .

"O2 emerged as the big winner, sweeping all the crucial 2.3GHz waves that can immediately deliver the much needed 4G capacity," said Kester Mann, analyst at CCS Insight. "As the operator most restricted by the spectrum, this sale was more crucial for O2 than any of its rivals and the result gives it the certainty to continue its strategy focused on mobile devices in the UK market. Telefonica matrix certain clarity about its planned IPO for the network ".

O2 is proud that users of uSwitch voted that it had the best coverage, but the benchmarking companies ranked it last in general tests, despite some good performances in individual categories and in some regions. The operator is famous for its customer service, but this can only go as far as the demand for coverage and data increases.

The acquisition of 2.3GHz waves gives the 4G plans of O2 a great opportunity in the arm and has already confirmed that it will deploy the spectrum through its LTE network immediately in London, with other cities, including Newcastle, Leeds and Edinburgh in the next months.

"With this spectrum investment we can build on our best publicly recognized network coverage, to also lead on the reliability and service of the network," said O2 CEO Mark Evans. "The real winners in this auction are the customers, since O2 invests to further strengthen its award-winning network, the radio waves that we have secured allow us to further improve our network, now and in the future."

(Image: © O2)

Operators can start planning 5G

The four main operators won 3.4GHz waves that will feed the first 5G service segment when they arrive in the UK , probably by 2020. O2 will use the 40MHz of 3.4GHz radio waves that it won to push its planned 5G testbed into the O2 arena later this year and eventually its future network, like the US

EE was suspended from participating in the 2.3GHz auction due to a limit in the spectrum usable by Ofcom before the auction, but will be pleased to secure the spectrum for its 5G service, as that Vodafone, which won 50MHz, s than any other.

"Vodafone will also be satisfied with the result, spending more on the 5G spectrum," added Mann. "This reinforces its renewed long-term commitment to the UK market after several years of stagnation, it still has a lot to do to change its fortunes, but today's news will drive long-term efforts to regain momentum."

Three won the least amount of any spectrum in any of the auctions, getting only 20MHz of 3.4GHz to play with. This was a bit surprising given the legal actions that were carried out in an attempt to make Ofcom's spectrum limit even lower.

"The result for Three will do little to improve its precarious position in the market," Mann continued. "Having fought tirelessly for more favorable conditions, it was surprising not to see him spend more." It will be particularly disappointing to miss the vital 4G waves to support your data-hungry clients.Three continue subscales and no fixed line assets in a moving market Gradually towards multiplay services and today's result will not help to quell doubts about its long-term future. "

However, it is worth noting that Three has 3.4 – 3.9 GHz spectrum assets that it acquired during the acquisition of UK Broadband, which offers fixed wireless access broadband (FWA) under the Relish brand.

In terms of the other participants, the small carrier operator Airspan walked away empty-handed, while Hull broadband company FWA Connexin withdrew before the auction began.

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Now what?

Ofcom will be happy that its goal of freeing as much spectrum as possible for 4G and 5G services has been fostered and that its spectrum limit has been implemented without further legal impediments.

Many headlines claim that 5G in the UK is now one step closer, but the reality is that the 2020 deadline is still mostly set at ne unless one of the operators in the UK decides to jump the gun. The 3.4GHz band is just one of many bands destined for 5G including 700MHz spectrum and millimeter wave (mmWave) and this is simply the first stage.

In fact, it will be the frequencies of 700MHz used by Digital Terrestrial Television (DTT) are the next to be available at an auction, possibly next year, so, although this was an important event, it was not the day of the judgment.

"An unsatisfactory outcome in this auction will never necessarily mean the end for any future 5G operators given that the technology will eventually work through a series of spectrum bands, both new and those already owned by mobile operators," he said. Matthew Howett of Assembly Research.

So, if there were no losers, then who were they? the winners? Maybe it was O2, but ultimately it's the consumers who will get better networks from the operators who can spend more money on infrastructure instead of spectrum licenses.

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