UK cellcos react angrily to refarming plan
Everything Everywhere and 3UK call for sub-1GHz spectrum caps to protect competition
Published: 10 January, 2011
READ MORE: Spectrum | UK | Regulator | UMTS
Last week it seemed that UK regulator Ofcom had finally reached a compromise on refarming the country's 2G spectrum, but the disputes and legal challenges of the past few years are not over yet.
Ofcom gave the green light to refarming last week, but only Vodafone and O2 hold spectrum in the 900MHz GSM band, which is regarded as the most cost-effective for 3G expansion because of its long range and indoor penetration. This has aroused the fury of the leading UK operator, Everything Everywhere (a joint venture between T-Mobile and Orange), and of the smallest player, 3UK.
Everything Everywhere has hit out at the Ofcom plan, claiming it will strengthen the market distortions that already exist because of uneven distribution of spectrum. Both TMo and Orange run their GSM networks in the less attractive 1.8GHz band, while 3UK only has 3G networks (like those of its rivals, in 2.1GHz).
Everything Everywhere is calling for Ofcom to level the playing field when it holds auctions of 800MHz digital dividend licenses, as well as 2.6GHz, next year. This could be done by imposing spectrum caps on sub-1GHz holdings, which would prevent Vodafone and O2 from acquiring much of the 800MHz supply. If the regulator does not take this decision, the UK's digital future is at risk, the carrier told V3.
Kevin Russell, CEO of Hutchison subsidiary 3UK, also slammed Ofcom's plans and said they could reduce competition further in the country, forcing further consolidation in the wake of the TMo-Orange merger.
Some analysts believe that, if 3UK fails to achieve spectrum caps under 1GHz, it could become a takeover target for Vodafone or O2.
"Ofcom and the government are jeopardizing the whole competitive environment that the 3G auction in 2000 started to establish," said Russell, in a statement to Bloomberg. "If the government and Ofcom get this wrong, further consolidation could result."
Ofcom responded to the complaints with a statement that it will "continually monitor the competitiveness" of the UK market, and could consider spectrum caps in future auctions.
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