Three chief hits out at government for 2G refarming decision

The chief executive of Three, Kevin Russell, has hit out at the government and Ofcom over the decision in January to allow mobile operators to reuse their 2G spectrum allocations for 3G services.

Speaking at a Westminster Forum event on Tuesday, Russell said that Three, which only owns 3G spectrum in the 2100MHz band, was unfairly impacted by this decision as it meant its rivals were suddenly given a huge boost in spectrum coverage.

"The government's refarming of spectrum gives Everything Everywhere, O2 and Vodafone a significant benefit and we view it as a distortion of the market," he argued.

"What's being gambled with is more than just mobile competition but the role mobile plays in the evolution of broadband and the economic growth of the UK, and I worry about the impact of the refarm on the competitive dynamic of spectrum."

Russell added that he felt a lot of the ways in which Ofcom and the government had justified the refarming were "myths", such as the suggestion that the move had been undertaken to allow the other operators to alleviate capacity constraints.

"We have nine per cent of the spectrum holdings in the UK but carry 50 per cent of the smartphone traffic and seem to be managing that capacity well enough, and will do so for the next couple of years," he said.

He also said that other ways in which the government had justified this change, such as arguing it would take Vodafone and O2 years to be able to benefit from this by upgrading their sites, was incorrect.

However, David Rodman, head of regulatory affairs at Vodafone, disagreed with Russell, claiming it was a lengthy process for the firm to clear 2G spectrum for 3G use so it was unlikely to be implemented soon.

Furthermore, Ofcom's director of spectrum policy group, Hyacinth Nwana, said the watchdog had made its decision based on future spectrum auctions, which could help Three re-address this perceived imbalance.

"The advice we gave to the government was predicated on the forthcoming availability of the 2.6GHz and 800MHz spectrum that firms that don't have sub-1GHz spectrum [such as Three] would have the ability to acquire," he noted.

Despite this issue Russell was otherwise bullish on Three's position in the market, claiming the firm was selling more iPhones than any other operator and revealing that smartphones accounted for 90 per cent of all contract sales in the past 12 months.