Three has urged Ofcom to ensure that BT and EE are not able to use their financial strength to snap up more spectrum holdings at the expense of other operators by limiting how much they can buy in auctions taking place later this year.
Three CEO David Dyson told The Financial Times that the firm is concerned that BT will use its strength to buy even more spectrum and that this will limit Three’s ability to remain a viable operator in the market.
“The combination of BT and EE is incredibly strong financially. It has the ability to outcompete everyone in the market in how much they are willing to pay,” he said.
“Potentially, given how much spectrum they are already sitting on, BT is incentivised to strategically bid in the next auction to restrict the other operators in the market from increasing their spectrum portfolio. That could make life difficult.”
Ofcom should bring in “fairly significant restrictions” on BT to stop this happening, according to Dyson.
The auction of the new spectrum is expected to take place later this year. It was originally intended for early 2016 but was delayed by Ofcom owing to the potential merger of O2 and Three at the time.
The spectrum up for grabs is significant, as it represents around three-quarters of the amounts issued in 2013 for the first 4G spectrum auctions, which helped kick start 4G coverage in the UK.
The spectrum sits in the 2.3GHz and 3.4GHz bands and is ideally suited to mobile broadband 4G services. Vodafone and EE use the 2.6GHz band to deliver some of their 4G services. The new spectrum was released by the Ministry of Defence.
Dyson's comments from come after Three’s proposed acquisition of O2 was blocked by the European Commission after concerns that creating a three-player market would limit competition and harm consumers.
Dyson explained that the firm is disappointed with the decision but will move on and find new ways to compete.
“You have to move forward and make the most of the cards you’re dealt even if you disagree with the decision. We have a challenger DNA in the business," he said, although he added that investment is not always easy with the smallest customer base.
"At the right valuation, Hutchison will invest but as the smallest [operator] we have few customers to recoup the investment.”
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