UK’s 5G Spectrum Auction and O2’s Plan of Legal Challenge

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UK’s 5G Spectrum Auction and O2’s Plan of Legal Challenge

 UK’s 5G Spectrum Auction and O2’s Plan of Legal Challenge

The UK Government is faced with various challenges amid the coronavirus crisis. The whole government machinery has been put to contain the spread of the novel coronavirus, which has put many important government decisions on the back burner, lots of regulations and decisions are getting delayed as UK authorities are busy with the covid-19 crisis and plan to a gradual exit from the lockdown. Amid all these, the 5G networks auction could also get delayed, as O2 which is a telecommunications services provider in the United Kingdom, has announced that it could take legal action against Telecom regulator's rules and regulation that has been set for the auction. In March this year, the government agreed with the companies involved to provide the best quality voice and data coverage of minimum ninety per cent to the United Kingdom by 30 June 2026. As per reports, all four major network companies had started their 5G operations, so all are now are capable of winning the auction.

Let’s, delve deep into the issue, according to the telecom regulator of the country, Ofcom, which determined guidelines for the auction, three out of four major mobile network operators in the United Kingdom will have a ceiling on the extent of the spectrum they may acquire. In March 2020, the UK Telecoms Regulator confirmed their rules for the year 2020 upcoming sale of the 700MHz and 3.6-3.8GHz radio spectrum bands, with the expectations to enhance new 5G mobile network exposure and mobile broadband speeds further into the Gigabit-capable (1000Mbps+) territory. Ofcom, while elaborating said that the reason for putting a ceiling is to confirm that Mobile Network Operators will hold 37 per cent or less spectrum available for providing mobile services. However, O2 will not be considered for this cap and can hold more than 37 per cent. Yet, it was stated that these rules could push the companies to take legal recourse, and that can impact the timing of the sale. As per some reports, O2 expects that telecom regulator clear its stance on bands so that they are connecting rather than a fragmented spectrum. There is a possibility that legal review can be stopped if the regulator provides some time for discussion with regards to a single phase of the 5G network sale. However, it is still not clear whether this discussion will help in reducing O2's worries or not.

Overview of O2 UK (Telefonica UK Limited)

O2 UK is a telecommunications services provider in the United Kingdom and the leading business brand of Telefonica UK Limited. O2 has ~6,700 staffs and has more than 450 retail outlets. uSwitch, (an online and telephone comparison and switching service on a number of products) had bestowed the company with an award of the best network coverage in the year 2019. The company has its operations in the latest 5G technology, apart from this it also has a presence in 4G, 3G and 2G throughout the United Kingdom and also provides Wi-Fi facilities.

O2-Virgin Media merger

Recently, there were reports that Liberty's Virgin Media network company and Telefonica's British mobile operator O2 have entered into a discussion for a possible merger. The two companies are said to have decided to form a combined cable and mobile operator, which can compete with British Telecommunication, in a period of rising demand for digital connectivity.

Liberty Global is said to have proposed the Merger, though the final agreement could be expected in the coming week of this month. The news has supported the stocks of Telefonica SA (LON:0TDE) on the London Stock Exchange today, however, the company stated that it would inform the market about a successful deal between them as soon as possible.

O2 is known for its largest mobile network after EE, which delivers various services, including virtual network services. However, the Merger of these two companies will help them to establish as the largest company in the United Kingdom market to compete with the likes of behemoth British Telecommunication. As per the reports, this deal would let Telefonica, make some cash out of O2 in the UK while keeping its presence in the UK. The company aims to increase its revenue by 2,000 million with its new planned initiative.

Timeline of the UK’s 5G Spectrum Auctions

The first 5G Spectrum Auction was completed on 5th April 2018 by Ofcom with biggest Telecom companies such as Vodafone, EE, Three as well as O2, where O2 was the company which gained the maximum advantage of this auction. The company acquired two spectrums, i.e. 2.3Ghz and 3.4Ghz spectrum for 40Mhz by paying £205.9 million and £317.7 million. On the same time, Vodafone had bagged spectrum of 50MHz of 3.4GHz range by paying £378.2 million; EE had won 40MHz of 3.4GHz spectrum by paying £302.6 million and the other company Three had acquired 20MHz of 3.4GHz spectrum by paying £151.3 million.

Important point of UK’s 5G Spectrum.

  • The UK government believes that the Spectrum auction is an excellent way to enhance mobile coverage in the country.
  • 25GHz being freed by the telecom regulator in the spectrum band of 24.25GHz and 26.5GHz and 168MHz of the band between 7.9GHz and 8.4GHz. The authority is also working on a strategy to create the 1492-1517MHz band for wireless broadband service’s available by the end of 2022.
  • The Ministry of Defence was previously utilising 2.3GHz-3.4GHz band in the UK. However, it has been released by the UK government so that it could be made available for public use.
  • The second auction which is going to held in spring this year will have two stages, i.e. principal stage followed by an assignment stage. These stages have also been implemented in the previous auctions as well.
  • As per the Ofcom announcement the reserve cost of the upcoming auctions are as follows:
  • The reserve price will be £100 million per lot, considered for six lots of total 60MHz in the 700MHz spectrum.
  • The reserve price of £1 million per lot has been determined for Four lots of 5MHz of 700MHz downlink-only spectrum.
  • The reserve price of £20 million per lot has been fixed for 24 lots of 5MHz of 3.6-3.8 GHz band.
  • The 3.6GHz – 3.8GHz and 700MHz spectrum auction is expected to be held in spring of the year 2020.

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