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Spectrum trading thwarted: 5G stumbling blocks endure

3 September 2021
Access report

The two-part nature of the UK 5G auctions has thrown up various issues, with non-contiguous spectrum blocks proving the most challenging to resolve.

The Annual Licence Fees (ALFs) attached to H3G’s spectrum are the crucial stumbling block in spectrum trading negotiations, creating a level of uncertainty which is not conducive to striking a sensible deal.

Ofcom has a crucial role to play in securing an efficient outcome and time is very much of the essence.

Related reports

Deals not quite done: 5G spectrum auction final results

27 April 2021

Spectrum auction assignment stages are normally fairly dull and routine, but due to the two-part nature of the 5G auctions, and the critical importance of proximity and contiguity, this is not the case with 5G.

The assignments won, combined with the Vodafone/O2 deal, ensures that all the operators enjoy at least 80MHz of (essential) proximity, but only O2 gets (nice-to-have) contiguity.

Further swaps could ensure contiguity for all, but this requires H3G to co-operate, which is in its absolute, but not relative, best interests.

Access report

End-of-line spectrum 50% off: UK second 5G auction results

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Ofcom’s second 5G auction concluded with proceeds half those of historic levels for a number of reasons.

The outcome is positive for all operators with no major surprises. The results imply a much more level playing field for the UK mobile operators than in the past.

A relief for the operators but proceeds for the exchequer will be disappointing, and ALF renegotiation may reduce their revenue steam further.

Access report

2021 spectrum auction: Uncertainty prevails

9 December 2020

COVID, potential consolidation, implications for ALF pricing and non-contiguous blocks have conspired to make the forthcoming second 5G spectrum auction a highly complicated affair.

H3G seems unlikely to bid in a meaningful way for the 5G spectrum (3.6GHz+) but is expected to share the 700MHz band with EE. With the three leading operators likely to split the 3.6GHz+ spectrum between them, proceeds of £1bn-£2.7bn are conceivable.

The non-contiguous nature of the spectrum blocks on offer risks the operators ending up with fragmented holdings in spite of Ofcom’s endeavours to encourage trading—an efficiency loss of up to 20%.

Access report

  • Deals not quite done: 5G spectrum auction final results

    27 April 2021

    Spectrum auction assignment stages are normally fairly dull and routine, but due to the two-part nature of the 5G auctions, and the critical importance of proximity and contiguity, this is not the case with 5G.

    The assignments won, combined with the Vodafone/O2 deal, ensures that all the operators enjoy at least 80MHz of (essential) proximity, but only O2 gets (nice-to-have) contiguity.

    Further swaps could ensure contiguity for all, but this requires H3G to co-operate, which is in its absolute, but not relative, best interests.

    Access report

  • End-of-line spectrum 50% off: UK second 5G auction results

    17 March 2021

    Ofcom’s second 5G auction concluded with proceeds half those of historic levels for a number of reasons.

    The outcome is positive for all operators with no major surprises. The results imply a much more level playing field for the UK mobile operators than in the past.

    A relief for the operators but proceeds for the exchequer will be disappointing, and ALF renegotiation may reduce their revenue steam further.

    Access report

  • 2021 spectrum auction: Uncertainty prevails

    9 December 2020

    COVID, potential consolidation, implications for ALF pricing and non-contiguous blocks have conspired to make the forthcoming second 5G spectrum auction a highly complicated affair.

    H3G seems unlikely to bid in a meaningful way for the 5G spectrum (3.6GHz+) but is expected to share the 700MHz band with EE. With the three leading operators likely to split the 3.6GHz+ spectrum between them, proceeds of £1bn-£2.7bn are conceivable.

    The non-contiguous nature of the spectrum blocks on offer risks the operators ending up with fragmented holdings in spite of Ofcom’s endeavours to encourage trading—an efficiency loss of up to 20%.

    Access report