– UK 5G auction: O2 and the state win, Three and consumers lose

“That operators paid higher than expected prices is good for HM Treasury but not so good for consumers, as it leaves the operators with less money to invest in their 5G networks and services. In today’s market, operators are capex constrained,” said Bengt Nordstrom of telecoms consultancy Northstream. “It would have made more sense for Ofcom to agree a set 5G licence fee with each operator, which would then leave them with more money to invest in their networks.

“The results of the auction confirm our view that the mobile industry has passed the stage where we should expect new entrants in national markets to build and launch new mobile networks that compete with the incumbents. This in turn makes the idea of a competitive spectrum auction even more strange. It was a given that the UK’s four incumbent operators would win the 5G licences – therefore why would Ofcom drive up the prices?”

Nordstrom makes a good point. This auction was effectively a one-off tax of £1.4 billion on UK mobile phone users that the government doesn’t seem to even attempt to justify. Even Three feels it’s partially priced out of auctions on the basis that it doesn’t have the subscribers to justify a greater outlay, but we have limited sympathy for that position.

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