Ofcom has outlined rules for the forthcoming 2017 spectrum auctions that include banning BT from bidding for one half of the frequency up for grabs.
The auction is centred around 190MHz of spectrum in two bands - one at 2.3GHz and one at 3.4GHz - which once released will increase the amount of mobile spectrum available by 29 per cent, from 647MHz to 837MHz.
The 2.3GHz band is currently used by most smartphones for mobile data services. As such, any operator that picks up more of this frequency will be able to boost its capacity immediately.
However, given that BT, through its acquisition of EE, already owns 45 per cent of usable spectrum in the UK, Ofcom has said it cannot bid for any spectrum in this range as it would give it a market share of over 50 per cent.
This means only Three, O2 and Vodafone can bid, although Ofcom has still put a cap in place of 255MHz on the amount of new spectrum in this range any operator can buy.
The 3.4GHz band is not currently in use for mobile services but is seen as likely to be used for 4G, and even 5G services, in the future. Ofcom has not put any caps in place on this frequency.
There are also no coverage obligations in place on the spectrum. Ofcom claimed that the frequencies on offer are more suited to boosting capacity than to wide area coverage.
Philip Marnick, Ofcom spectrum group director, explained that the organisation is keen to ensure that spectrum is handed out fairly, given its importance for the UK’s economic future.
“Spectrum is the essential resource that fuels the UK’s economy. This auction can help ensure that UK consumers can access the mobile data services they need, and that operators can continue to innovate and build for the future,” he said.
“The UK has long benefitted from strong mobile competition. We are designing the auction to ensure everyone benefits from a market that continues to innovate and serve them well.”
However, not everyone is happy. Three CEO Dave Dyson criticised Ofcom for not doing more to force BT to divest some of its holdings, claiming that the current set-up gives them far too much power.
“The mobile industry is failing customers and Ofcom has showed it has no interest in addressing that,” he said.
“A 30 per cent cap on total spectrum ownership and a spectrum reservation for smaller operators are the only measures that will preserve competition for the benefit of UK mobile consumers.”
EE CEO Marc Allera said that the firm does not agree that competition measures should be introduced, but that the firm would consider the proposals by Ofcom before issuing a detailed reply.
Kester Mann, principle analyst at CCS Insight, suggested that Ofcom’s decision raised numerous potential problems.
“The proposed restraints placed on BT/EE show that Ofcom is concerned that spectrum asymmetry could harm UK mobile competition over the coming years,” he said.
“However, they also raise questions as to why the BT/EE merger was waved through with such little fuss, without any apparent need to mandate divestment.”
He also said that Three and O2 had the most to gain from the auctions and may be unhappy that more has not been done to limit BT. However, any hold-ups could damage their long-term interests.
“Expect today’s announcement to be just the start of another round of wrangling and protestation from the UK networks that could see the award of licences further delayed,” he said.
“Any additional hold-up works against Three and O2, which are most in need of new airwaves.”
He noted too that the auctions are vital for all players as they are likely to be the last chance to buy any spectrum until at least 2020, when more spectrum in the prized 700MHz band will be released.
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