The telco had argued the regulator should take a different approach, with operators paying a set price for access and spectrum evenly distributed.
Speaking to The Reg, Vodafone UK CEO Nick Jeffrey argued that squeezed UK telcos face the lowest ROIs in the world, and are set to face additional costs following this week’s ban of Huawei from the national 5G networks.
“Now is the time to consider a new way to manage these auctions,” he said.
He claimed it is essential to “focus on ensuring operators can still afford to invest in the network this country deserves. There is little point in operators owning spectrum if we don’t have the money to use it – history teaches us that from the 3G auctions.”
The next 5G spectrum auction – which will take place in November at the earliest – has suffered several delays and setbacks, not least due to the ongoing coronavirus pandemic.
In May, Telefónica’s O2 declared that it intended to take legal action against the industry regulator over concerns about the auction’s terms, including Ofcom’s decision to auction off fragmented tranches of spectrum rather than contiguous slices.
On an operational basis, 5G works best when networks have access to a large block of contiguous spectrum. Ofcom, however, intends to distribute spectrum rights in blocks of 5MHz, which would force networks to negotiate for placement.
Even if it was motivated to do so, it’s unclear whether Ofcom is positioned to make the kinds of concessions Vodafone is looking for. Most likely, any reworking of how spectrum is sold would require intervention from central government – which, at the moment, has bigger fish to fry.
It’s also plausible that Vodafone is attempting to limit its costs by reworking the terms of engagement. This is entirely understandable, given the costs associated with spectrum access.
Auctions come with inherent uncertainty, with pricing determined by how much operators value (and, indeed, need) spectrum access. They are competitive by nature, and that competition can see costs quickly spiral. The 2000 3G spectrum auctions are perhaps the best proof of that, with government raising £22.5bn – or 2.5 per cent of the UK’s then GDP – from carriers.
El Reg has asked Ofcom and Vodafone for comment. ®
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