The announcement marks the start of a consultation with potential bidders on how best to proceed with the auction that is scheduled between late 2015 and early 2016.
Since its last consultation on the auction, Ofcom said BT has announced plans to acquire EE, while Hutchison Whampoa has reached an agreement to acquire the O2 from Telefonica. Should the proposed merger proceed, it will reduce the UK wholesale mobile market from four major operators to three, noted the regulator.
"It is not Ofcom's role to decide whether these mergers should go ahead. This rests with the relevant competition authorities. However, Ofcom has a duty to secure the optimum use of spectrum," the regulator said.
Ofcom said that it plans to award the 2.3GHz spectrum in 10MHz lots and the 3.4GHz spectrum into 5MHz lots.
A total of 190MHz of spectrum will be released to the regulator by the Ministry of Defence. Of that, 40MHz in the 2.3GHz band and 150MHz from the 3.4GHz band will be on offer. The UK regulator said it is considering withholding 60MHz for a later sale.
“Our initial thinking is that it may be appropriate to withhold around 60MHz of the 190MHz of spectrum available,” said Ofcom. It will make a decision after receiving feedback from stakeholders. The consultation will close on June 26 2015.
Ofcom would issue licences for the two spectrum bands for an indefinite period with an initial term of 20 years, after which licence fees may be payable. There will be no coverage obligations placed on the licences, it added.
Ofcom noted that that spectrum is likely to be of interest to mobile broadband operators. "Ofcom's objective is to award the frequencies in a way that will allow consumers to enjoy greater access to high-capacity mobile Internet without undue delay," the regulator said.
It proposed minimum reserve prices in the 2.3GHz spectrum between £2.5 million-£5 million per 5MHz and £1 million per 5MHz block for the 3.4GHz spectrum. According to the regulator, the sum of the reserve prices means it could raise upwards of £50 million-£70 million from the sale.
