Ofcom caps EE and BT's spectrum bidding

Ofcom is capping how much spectrum a mobile operator can own at 37% effectively banning the tie up between BT and EE from bidding at the next spectrum auction.

The telecoms regulator is set to auction licenses for 190MHz of spectrum later this year. One slice of 40MHz will be auctioned off in the 2.3GHz band, which Ofcom noted could be used immedately to boost capacity, offering faster downloads for mobile users. A second tranche, of 150MHz, will be sold off in the 3.4GHz band, to be used in the future for 5G.

The auction will have two limits, both of which will keep BT which bought EE back in 2015 from bidding and gobbling up more spectrum. The first cap was set in November, preventing anyone from holding more than 255MHz of the 2.3GHz band.

The second cap, announced today, limits operators from holding more than 37% of spectrum expected to be useable in 2020. That includes the 3.4GHz band on sale later this year, as well as existing holdings of the 700MHhz band.

"Taken together, the effect of the caps will be to reduce BT/EE's overall share of mobile spectrum; the company can win a maximum 85 MHz of new spectrum in the 3.4GHz band," Ofcom said in a statement. "The overall cap also means that Vodafone could gain a maximum 160 MHz of spectrum across both the 2.3GHz and 3.4GHz bands."

No other operators would be limited by the caps.

Philip Marnick, Ofcom's Spectrum Group Director, said in a statement that such spectrum is a vital resource for the economy. "We've designed this auction to ensure that people and businesses continue to benefit from strong competition for mobile services," he said.

Marnick added: "We want to see this spectrum in use as soon as possible. With smartphones and tablets using even more data, people need a choice of fast and reliable mobile networks. These new airwaves will support better services for mobile users, and allow operators to innovate and build for the future."

Marc Allera, CEO of EE, disagreed but said the company would still be bidding for what spectrum it could still buy. "While we don't agree that spectrum caps were necessary for this auction, our focus remains on investing in our network, using our existing and future spectrum to provide the best mobile experience for our customers across the UK," he said in a statement. "We look forward to bidding for additional spectrum in this auction."

The regulator's cap was welcomed by the Internet Telephony Services Providers' Association. "Overall, we are pleased that Ofcom has listened to some of the concerns of industry and adjusted their plans according to the changing communications landscape," said ITSPA Chair Eli Katz. "We believe this is a positive step to ensure that the UK mobile market remains competitive and open to innovation".

"Whilst we welcome the developments as a positive move, we still believe there is a need to review the current wholesale access remedies to support the mobile virtual network operator (MVNO) market," Katz added. "This is a fledgling sector that needs more support to ensure the wider mobile market is vibrant and open to disruption."