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Spectrum caps on 4G network ‘unfair’, mobile giant claims

Spectrum caps proposed by Ofcom for the 4G network could hinder the development of the market, Everything Everywhere, the parent company of Orange and T-Mobile has claimed.

Yesterday (22 March) Ed Richards, chief executive of telecommunications regulator Ofcom, outlined plans for its largest auction to date of mobile phone spectrum, which would enable high-speed wireless internet around the UK.

The auction – taking place in 2012 – will allow mobile network providers to bid for the rights to fourth generation (4G) radio spectrum – which enables connections at speeds of up to 100Mbps, about 25 times faster than the average home broadband connection. The disposal will give access to 80 per cent more radio spectrum than was sold in 2000, when the 3G spectrum was auctioned for £22bn. As Vodafone and O2, already occupy a substantial proportion of radio spectrum the price is expected to be considerably lower when mobile operators bid in 2012.

Mr Richards said there would be “significant risks” to competition if fewer than four national competitors acquired parts of the new spectrum and has therefore set caps that will allow all the UK’s four operators – Vodafone, O2, Everything Everywhere, and 3 – to acquire the low frequency and high frequency airwaves on offer.

However Tom Alexander, CEO of Everything Everywhere, said while he welcomed the proposals, further debate was required around the subject before the rights were made available in 2012. He said: “The ambition and vision of Ofcom is aligned to our own belief that people should have instant access to whatever they want, wherever they are – instant access to everything, everywhere – through both fixed and mobile networks, and this relies on the fair provision of spectrum. We hope that, through consultation Ofcom may look to address a number of issues, including the overall spectrum cap, which is currently set at a level which ignores the different characteristics of low and high frequency spectrum and differing numbers of customers, meaning that it may constrain the normal development of the market.”

This was a view reiterated by Ronan Dunne, CEO of O2, who said: “It is important to remember that this auction is about the future. And, as we have said before, it is critical that the conditions for the 4G spectrum are set for fair competition for all, realised through a simple, speedy process.”

Kevin Russell, chief executive of 3UK, said: “This is a clear and strong commitment from Ofcom and the UK Government that will stimulate investment in mobile broadband and protect UK consumers.”

Due to the time and expense involved in setting up the new systems, it is unlikely the benefits of a 4G mobile network will be available to consumers until at least 2014.