Vodafone has called for the upcoming UK 5G mobile spectrum auction to be abandoned following the government decision to ban the use of Huawei radio kit in future networks.
Earlier this week, it was confirmed UK mobile operators will be banned from buying telecoms equipment from Huawei by the end of the year and will also have to strip out existing 5G kit made by the company by 2027.
This reversal of policy could delay 5G rollout by up to three years and add £2 billion of additional costs to operators.
UK 5G auction
Vodafone UK CEO Nick Jeffrey said the ruling would consume financial and technical resources that could have been spent on network infrastructure.
The government has not indicated that any financial support will be forthcoming to compensate operators for additional expenses incurred. However Jeffrey believes a different approach to spectrum allocation could help mitigate some of the costs.
Later this year, Ofcom will auction 200MHz worth of low-level and mid-level 5G frequencies. The 700MHz band offers greater range and indoor propagation, while the 3.6-3.8GHz band have greater capacity but limited range.
Rather than ‘bidding’ for spectrum, Vodafone proposes operators would be given a share of airwaves in exchange for the reserve price. This would reduce the cost of spectrum – helping operators but reducing the revenue generated for the treasury.
While other countries use a spectrum allocation model, the government’s approach to auctions is much more pragmatic than the heady days of the 3G era. There is still belief that an auction ensures a fair value for a public resources, there is increased recognition that the indirect benefits of mobile connectivity to the economy are greater than the direct financial gain of licences.
That infamous sale of 3G spectrum in 2000 saw £22 billion generated for the government but left operators with limited capital for network rollout.
It was a lesson that regulator Ofcom recognised when it (finally) auctioned 4G airwaves back in 2013. Some observers lamented the sale only generated £2.31 billion rather than the £4 billion windfall anticipated by the treasury, but the regulator was keen to stress that its role is to maximise the efficiency of the spectrum and its value to society. The first 5G auction generated just £1.4 billion in early 2018.
A distribution model could have another advantage in that operators could be allocated contiguous blocks of spectrum.
Ofcom’s current proposals for the auction involve two stages. The principal stage will see participants bid for separate lots of spectrum and assignment stage will determine specific frequencies. Operators will be able to negotiate between themselves so that their new spectrum is adjacent to existing frequencies.
The possession of contiguous spectrum is seen as a vital consideration for 5G as it allows operators to offer more reliable services and connections. Three has been vocal about its possession of 100MHz block of 3.4GHz airwaves.
O2 has previously called for spectrum to be harmonised at the point of allocation and has voiced its concern. If the regulator fails to address the issue then delays could be possible, adding an additional delay to the rollout of 5G.