Ofcom cuts penalty for invalid bids in 1.4 GHz auction rules

Ofcom will sell 25 MHz of spectrum in the 1492–1517 MHz band for a reserve price of just £5 million ($6.7 million), under final auction regulations published on 30 October that concede one point to operators while rejecting their other objections.

The UK regulator published the final draft Wireless Telegraphy (Licence Award) Regulations 2026, together with an information memorandum and bidder guidance. The award follows consultations in 2023 and February 2025, and a confirmation statement on 11 June 2026.

The band will be sold as a single lot in a single round. Bidders submit sealed bids without seeing anyone else's, and the winner pays the second-highest price. Applicants must pay an initial deposit of £1 million — roughly one fifth of the reserve price.

What did Ofcom concede?

Only Virgin Media O2 (VMO2) and VodafoneThree responded to the consultation on the draft regulations. BT/EE told Ofcom it had no comments.

VMO2 objected to bidders forfeiting their entire bid-sized deposit if they failed to submit a valid bid, calling the penalty "excessive and disproportionate". Ofcom said such a scenario "is very unlikely to occur", but acknowledged that "the possibility of forfeiting all funds deposited could cause concern to potential bidders and may be considered disproportionate".

Under the revised rules, a bidder that fails to submit a valid bid loses only its £1 million initial deposit and receives any further sums back — though it remains excluded from the award.

VMO2 also argued that requiring a deposit at least equal to the bid was "commercially restrictive and capital-inefficient", and that payments made outside the encrypted auction system "raise a serious bid confidentiality risk". Ofcom rejected the argument. "This requirement supports sincere bidding and the efficient operation of the auction," the regulator said, adding that it "disincentivises a bidder from bidding above its valuation in an attempt to increase the price payable by the winning bidder".

Because the deposit falls due only after bidding closes, "the amount transferred cannot inform bidders' decisions during the bidding round", Ofcom noted.

VodafoneThree said it was "satisfied that they give effect to the policy", but asked for a legal guarantee of refunds within seven days. Ofcom declined, citing "the potential for exceptional circumstances to arise outside of our control", but said it intends in most cases to start refunds two business days after bidding ends.

VMO2 separately repeated its objection to sealed bids, arguing the format "does not allow price discovery" and "should not set a precedent for future awards of core mobile spectrum". Ofcom's reply left the door open: "We will determine the design of each future award on its individual merits."

What can the spectrum be used for?

The band is designated for supplementary downlink (SDL) — data flowing only from base stations to devices, adding capacity and download speed rather than two-way connectivity.

The licence starts on 11 June 2027 or its date of issue, whichever is later, and runs indefinitely, with a 20-year initial term during which Ofcom cannot revoke it on spectrum management grounds. It is tradable and carries no roll-out obligations. Spectrum the winner leaves unused will be open to Ofcom's Local Access licensing.

Why does Inmarsat complicate the award?

The adjacent 1518–1559 MHz band is used by Inmarsat, owned by Viasat since 2023, for satellite services to ships and aircraft, including the Global Maritime Distress and Safety System. Ofcom warned there is "a risk that use of 1492–1517 MHz for mobile services could cause blocking of some terminal receivers on the Inmarsat network, which could lead to disruption".

The winner may not deploy in zones covering UK territorial waters, ports, inland waterways, four maritime safety sites and 32 airports and military airbases. In an initial phase, every large-cell deployment nationwide must be checked against the maritime limits, though Ofcom expects "most deployments more than 30 km from protected maritime areas will comfortably pass coordination".

The limits relax on 1 January 2034 at airports and on 1 January 2043 in maritime areas, "to provide time for Inmarsat satellite terminals with more vulnerable receivers to leave circulation". The maritime date could be brought forward if Viasat sets an end date for its Inmarsat C service.

The background is one of gradual European harmonisation: an European Commission decision in 2018 opened the wider 1427–1517 MHz range for mobile use, and the UK already uses the neighbouring 1452–1492 MHz band for SDL. Vodafone and Hutchison 3G UK, which merged in June 2025 to form VodafoneThree, hold 1472–1492 MHz; 1452–1472 MHz is jointly licensed to Vodafone and Telefónica UK until 30 September 2027, when it passes to Telefónica UK alone under the merger terms. The band itself was previously used for fixed links, now migrated elsewhere.

With a £5 million reserve on 25 MHz, the award itself is small money for the UK's four-network market — the real contest may be over whether sealed bidding becomes the template for Ofcom's future spectrum sales.