Mobile firms will today be putting the final touches to planned bids for tomorrow’s spectrum auction.
Regulator Ofcom will tomorrow start the process of flogging packages, some of which will allow mobile providers to roll-out 5G plans in around a year’s time.
Who is taking part?
Despite a wide range of mobile providers in the UK, only five firms will take part in the auction: EE, Three-owner Hutchison 3G, O2 parent Telefonica, Vodafone and US-owned challenger Airspan.
Ofcom has controversially placed a cap on the amount of spectrum EE and Vodafone can bid for – a decision that disappointed the firms in question and its rivals in equal measure.
Read more: Three and Vodafone are being investigated over net neutrality
What’s on offer?
This is where things get technical.
There is a total of 190 MHz on offer. Some 40 MHz relates to a 2.3 GHz band; this is compatible with current Apple and Samsung phones and will effectively boost the current 4G capabilities of the winning bidders.
In addition, there is 150 MHz on offer in the 3.4 GHz band. This the spectrum that will be used for future 5G services. While today’s devices will not support the band, it is hoped in around a year new technology will enable it to be used.
Read more: The 5G race is on, but Europe is lagging behind
How much will firms pay?
Ofcom has given no guidance on what companies will have to pay to secure the spectrum. However, it has put a reserve price of £10m on each of the four lots of the 2.3 GHz band and of £1m of the 30 lots of the 3.4 GHz band. So the absolute minimum the regulator will raise is £70m.
How does the auction work?
Unlike some other high-profile corporate auctions, regulator Ofcom has published details of how it will work.
There are two key stages. The first – the “principal stage” – sees bids put in at a certain price for each “package”. If there are more bidders than packages on offer, Ofcom ups the price and invites a fresh round of bids. Once a price is reached where the number of bids matches the number of packages on offer, the process is complete.
The second stage determines the airwaves pecking order. There is only one round in the “assignment stage” and bidders pay price set by the highest losing bidder i.e. similar the process used by online auction sites such as eBay.
Read more: Ofcom clamps down on BT and EE dominance by capping 5G allowances
When will we know the results?
There is no fixed timeline and it could take a number of weeks before everything is finalised.
However, at the end of each day, Ofcom said it will publish prices from the last round of bidding. In addition, it will outline the level of demand, called “excess demand”, in relation to the last round of bidding.
When all the rounds are complete, the regulator pledged to provide full details of how spectrum has been allocated.
Read more: 5G key for Three, says mobile firm’s boss