The Race for 5G

Posted on 10th April 2018

5G, the next generation of mobile wireless communications, isn’t set to roll out in the UK until 2020, but networks are ahead of the game. With EE’s Chief Executive predicting that 5G is only 18 months away in February, last week Ofcom auctioned spectrum to provide space for the coming generation of mobile networks.

Ofcom’s auction of spectrum in the 2.3 GHz and 3.4 GHz bands are sorely needed for the UK to develop 5G networks: the 3G and 4G bands have become crowded as demand for data soars, and 5G is predicted to bring even more. Not only is 5G expected to bring big speed boosts, the added capacity and low latency is considered essential for deploying the Internet of Things and connected transport. However, the transition will be expensive for carriers as they upgrade their equipment and face uncertain financial conditions.

Why are operators bidding?

After Connexin dropped out shortly before the auction, the bidders were the four largest UK mobile operators: EE, Three, O2 and Vodafone. A fifth bidder, Airspan Holdings, was a new entrant to the auction, but came away unsuccessful.

The bulk of the auction was for the 3.4 GHz band, which isn’t compatible with most devices yet and won’t be much used till the full rollout of 5G networks. For operators, the investment is about preparing for the next phase of the telecoms industry and ensuring they can participate, especially as growth slows in developed markets. However, some immediate benefit will be felt from the smaller auction of 2.3 GHz, which can be used straight away in 4G networks, and for 5G equipment manufacturers, for whom the certainty of future 5G investment will be welcome. And, of course, the British government, who raised a much higher-than-expected £1.35 billion.

Who won what?

Despite Three launching doomed legal proceedings to try and lower spectrum ownership caps to 30%, which would require massive redistribution from EE towards O2 and Three, the company made low bids in the auction and ended in a weaker position, with the least usable spectrum of the four companies.

Spectrum wars?

These allocations in the UK are part of a trend towards harmonisation, as several regulators around the world allocate these bands to mobile 5G development. This could further intensify the ongoing battle between mobile operators, satellite operators and government/not-for-profit organisations, as they fight for limited spectrum to deploy new communications technologies. Battles could result in ineffective spectrum usage, hoarding or harmful interference for existing users.

What’s next?

Similar spectrum auctions are expected across Europe, which will likely further harmonise 5G allocations for mobile. Other auctions in compatible frequency bands could be shared with other communications systems, helping spread the benefits of connectivity through several different systems coexisting.

The upgrade to 5G infrastructure has been expensive for networks, and despite falling MHz prices, operators like Three and even Orange, who as part of EE have the largest spectrum holdings in the UK, have complained about being priced out of the UK market in this auction. For areas less able to afford this, 5G threatens to widen the global digital divide and users will miss the economic and social benefits of connectivity.

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