UK auction could be delayed again says analyst
Further delays "almost inevitable" unless 3UK buys EE's offloaded 1.8GHz spectrum, predicts Ovum
Published: 1 May, 2012
Leading UK cellco Everything Everywhere has stepped up the propaganda drive behind its bid to launch LTE in its 1.8GHz band this autumn. But the continuing tensions between the country's four mobile carriers may not only delay EE's roll-out, but even the already postponed auction of new 4G spectrum.
This sale of 2.6GHz and 800MHz spectrum is currently scheduled for late 2012 but Matthew Howett, practice leader at analyst firm Ovum, thinks it is "almost inevitable" that the process will be delayed once again. The UK was once set to be Europe's first market to auction 2.6GHz licences but its auctions have been held back by legal challenges and disputes among the operators, as well as the impact of the merger of T-Mobile UK and Orange UK to form EE.
"The industry generally feels that the auction is very complex. The biggest opposition is still that [regulator] Ofcom are guaranteeing Three access to some spectrum, and I can't see them scrapping that entirely," Howett said in an interview with Computerworld. "Ofcom wants Three in the market. The problem is that the way Ofcom has done it with these minimum spectrum portfolios, is that they have made it a very complex auction, and that's not a good thing. You have got CEOs deciding whether or not to bid in a game that they may not fully understand."
He added pessimistically: "I think that Ofcom is fully gearing itself up for further delays, but they have got to make sure that whatever final decision they come to that if it is litigated that they are confident that they will win. If they don't then this literally does go back to square one and it could be many years before we get to auction."
Howett may think Ofcom has created an over-complicated auction process, but the agency has different issues to address, compared to counterparts elsewhere in the EU. This is mainly because of the UK's unique 2G spectrum position - Vodafone and O2 have their GSM networks in 900MHz, and EE in 1.8GHz. That has led to calls by EE and the 3G-only player, 3UK, to limit Vodafone's and O2's ability to secure 800MHz licences, since they already have sub-1GHz holdings, which are perceived to be optimal for LTE coverage. The two cellcos retort that 800MHz is likely to have greater potential for device availability and international roaming, and so they will be disadvantaged if they are stuck with 900MHz.
The situation was further complicated by the terms of the formation of EE, which will force it to divest 25% of its 1.8GHz spectrum this year. While the company is looking to deploy LTE in the refarmed 1.8GHz band, to gain a headstart on rivals even before the auction, its divestment could give one or more acquirers the same opportunity. Indeed, Howett thinks the best way out of the potential auction impasse is for 3UK to acquire the surplus 1.8GHz spectrum to make its own situation more viable, and make protections in the auction less important.
EE launched a web site this week, campaigning for Ofcom to green-light its 1.8GHz LTE plan as soon as possible, despite the claims by its competitors that it will gain an unfair advantage in mobile broadband if it is allowed to proceed before the auction. It said 4G roll-out could add 0.5% to the UK's GDP, create 125,000 jobs and unlock £5.5bn ($9bn) of investment in the country.