Ofcom has today (21 August 2012) announced its approval of Everything Everywhere’s (EE) request to liberalise 1800MHz spectrum for 4G, which paves the way for 4G mobile services to come to the UK this year.
In a statement, the UK communications regulator Ofcom said: ‘Following a consultation Ofcom has concluded that varying EE’s 1800 MHz licences now will deliver significant benefits to consumers, and that there is no material risk that those benefits will be outweighed by a distortion of competition. Delaying doing so would therefore be to the detriment of consumers.
‘The decision takes account of the forthcoming release of additional spectrum in the 800MHz and 2.6GHz bands, in an auction process set to begin later this year, which will enable other operators to launch competing 4G services from next year.
‘In parallel with this decision, Ofcom has now issued varied licences to EE which authorise LTE services from 11 September 2012. This means that EE can launch LTE services using its 1800MHz spectrum at any point from that date, although the precise timing of any launch is a commercial decision for Everything Everywhere.’
An Everything Everywhere spokesperson said: ‘Ofcom's decision to make 4G available this year is great news for the UK. Consumers will soon be able to benefit from the much greater mobile speeds that 4G will deliver. 4G will drive investment, employment and innovation and we look forward to making it available later this year, delivering superfast mobile broadband to the UK.’
Ofcom’s decision will not be welcomed by the other UK mobile operators, Vodafone UK, O2 and Three UK. Three has no 1800MHz spectrum, while Vodafone and O2’s 1800MHz holdings are not large enough to merit refarming for 4G services. EE has substantial 1800MHz holdings and the three other operators believe that Ofcom’s decision allowing it to get a head start in the 4G market is unfair.
The move drew a particularly strong response from Vodafone UK. A spokesperson said:‘We are frankly shocked that Ofcom has reached this decision. The regulator has shown a careless disregard for the best interests of consumers, businesses and the wider economy through its refusal to properly regard the competitive distortion created by allowing one operator to run services before the ground has been laid for a fully competitive 4G market.
‘Ofcom’s timing is particularly bizarre given the reports that Everything Everywhere is currently in discussions to sell some of its spectrum to 3, which Ofcom has previously been at such pains to protect with its over-engineering of the 4G auction. This means the balance in the auction will fundamentally change.
‘The regulator has spent several years refusing to carry out a fair and open auction. Now its decision today has granted the two most vociferous complainants during that entire process a massive incentive to further delay it.
‘We wholeheartedly support the Secretary of State’s call for the 4G auction to occur in December and look to the regulator to finally do its job and produce a competitive market for 4G services as soon as possible.
‘We firmly believe that a fully competitive market for 4G services is in the best interests of Britain. We have already committed ourselves to reach 98% of the UK population with indoor 4G services by 2015 – two years before Ofcom’s own target – but we need to acquire spectrum in the auction to achieve this. Ironically, all that stands in our way right now is the regulator,’ said the Vodafone spokesperson.
A Three spokesperson added: ‘Liberalisation of 2G spectrum to date has distorted the competitive landscape in the UK, which ultimately harms consumers. Further liberalisation without addressing competition issues could make that distortion worse.’
An O2 spokesperson said: 'We are hugely disappointed with today’s announcement, which will mean the majority of consumers will be excluded from the first wave of digital services. This decision undermines the competitive environment for 4G in the UK.'
EE has to divest itself of 2 x 15MHZ of 1800MHz spectrum as part of the EU’s approval of the merger between Orange UK and T-Mobile UK. Ofcom has reserved some spectrum for a ‘fourth’ operator – in all likelihood Three to ensure there are four credible mobile wholesalers in the UK.
However, the decision is contingent on who buys EE’s 2 x 15MHz of 1800MHz spectrum. If Three does buy it, then it is likely that no spectrum will be set aside for a fourth bidder and all the 800MHz and 2.6GHz spectrum will be available for bidding (although total holdings will be capped).
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