The chief executive of Ofcom has warned that mobile operators could undermine the watchdog and force the government to take over the management of the telecoms sector if they continue to threaten legal action over the 4G auctions.
Ed Richards said at the European Competitive Telecommunications Association Regulatory Conference on Tuesday that the threats to Ofcom are clearly based on operators' self-interest, rather than on wider concerns.
"It has been very disappointing to witness the extent to which the incumbent mobile operators have chosen to entangle this process in litigation or threats of litigation," he said.
"When litigation becomes strategic rather than based on objective grounds, and has the effect of holding back innovation and hampering growth, it is legitimate to ask whether the overall legislative framework supports the public interest in this vital area."
Richards warned that such actions have the potential to further delay the 4G auctions at a time when the government is working towards the first draft of a new Communications Act and this could see powers taken away from Ofcom.
"I think some major companies will have to reflect upon whether they have inadvertently jeopardised the benefits of objective, independent regulation in this area by virtue of their willingness to game the system," he said.
"I am sure legislators would be all too willing to accept an argument which returns power in such matters to politicians, in light of the apparent inability of the current model to make timely decisions where the national interest is at stake."
Operators have claimed that Ofcom's proposed auction system, which includes the use of spectrum floors to ensure that certain operators receive a given portion of the spectrum, are unfair. O2 has been one of the most vocal opponents.
The complaints forced Ofcom to open another round of consultation on the proposals, pushing the date for the auctions back to the second half of 2012, a decision the regulator defended as having no material impact on the availability of 4G services.
Internet minister Ed Vaizey also urged operators to draw a line under their legal challenges to ensure that the 4G auctions happen as soon as possible as the UK continues to fall behind in the LTE market.
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