On 24 January 2018, Ofcom published a statement and made the Wireless Telegraphy (Licence Award) Regulations 2018 (SI 2018/86) which set out the process for the auction of spectrum in the 2.3 GHz and 3.4 GHz bands (the "Auction"). The Auction regulations give effect to policy decisions made in connection with the Auction that were set out in previous Ofcom statements published in May 2015, October 2015 and July 2017.
The Auction was originally expected to take place by early 2016. It was delayed due to market uncertainty pending the outcome of the European Commission's ruling on Hutchison 3G's proposed acquisition of Telefónica UK (operating as O2). In July 2017, Ofcom issued its long awaited statement on the competition issues and outstanding aspects of the proposed regulations for the award. In light of concerns that the Auction could give rise to a very asymmetric distribution of spectrum holdings between the UK mobile network operators, Ofcom decided to impose two separate caps on the amount of spectrum a single operator may hold. Taken together, these two caps prevent BT / EE from bidding in the 2.3 GHz spectrum auction. The caps also restrict the amount of spectrum that can be awarded to BT/EE in the 3.4 GHz band and Vodafone across both of the spectrum auctions.
Parts of Ofcom's decision on competition issues set out in its July 2017 statement were the subject of judicial review proceedings in the High Court brought by Hutchison 3G (operating as Three), and BT/ EE. BT/ EE also challenged Ofcom's decision on the treatment of the pre-existing licence holder in the 3.4GHz band. The High Court rejected these challenges on 20 December 2017 and Three has now sought permission to appeal to the Court of Appeal which will be heard on 13 and 14 February 2018.
In its January 2018 statement, Ofcom acknowledges that it is "in the public interest for the Auction to take place as soon as possible". In particular, this is in light of the significant demand for access to the spectrum, and the immediate and direct benefits to consumers of faster, higher-quality mobile data services. Despite Three seeking permission to appeal, the regulator has proceeded to make the Auction regulations to ensure that it is in a position to "move as quickly as possible to hold the Auction" once the Court of Appeal has handed down its judgement. It is worth noting that the decision of the Court of Appeal may also be challenged which could result in further delays to the Auction.
The Regulations will come into force on 31 January 2018. If any further amendments are required due to the Court of Appeal's judgement, Ofcom plans to action these as soon as possible to minimise further delays to the Auction.
Ofcom has also published the application forms and guidance for potential bidders who are interested in taking part in the Auction. Once the Regulations are in force, the regulator plans to confirm the date on which it will accept applications and this is expected to be on or around 8 February 2018.In parallel, on 25 January 2018 Ofcom also made two further statutory instruments in connection with the award of 2.3 and 3.4 GHz spectrum. These comprise: (i) the Limitation Order, which limits the number of licences to be awarded for the two spectrum bands; and (ii) the Register Amendment Regulations, which allow Ofcom to publish certain information regarding the licences awarded under the auction regulations. These two statutory instruments have been submitted for registration and publication, and will come into force on 1 February 2018.
The Auction has remained a priority on Ofcom's proposed annual plan for the last couple of years. Whilst the exact timing of the Auction still remains uncertain, given the delays to date, Ofcom is clearly keen for it to take place as soon as possible this year.
For further details on the Auction and Ofcom's previous related statements please refer to the firm's article here.