Everything Everywhere, the company behind the T-Mobile and Orange brands in the UK, will be allowed to offer 4G services from 11 September.
The regulator, Ofcom, gave permission for the move on Tuesday, allowing Everything Everywhere (EE) to roll out fast mobile broadband before its rivals can. EE requested Ofcom's permission in January, and got a preliminary green light in March.
Now Ofcom has formally issued EE with new licences that let the operator reuse its existing 2G spectrum, originally designated for voice and text, for 4G services from 11 September.
EE has previously said that it is ready to start offering 4G services this year, if given permission by Ofcom.
"Ofcom's decision to make 4G available this year is great news for the UK," EE said in response. "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 also said consumers would benefit from the move.
"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," the regulator said. "Delaying doing so would therefore be to the detriment of consumers."
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However, rival operator Vodafone said it was "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," a Vodafone spokesperson said.
Vodafone also characterised Ofcom's timing as "particularly bizarre", given that EE is reportedly in talks to sell some of its 1800MHz spectrum to the smaller operator Three, which has no such spectrum of its own. If that sale goes through, Three could then theoretically roll out 4G services of its own without needing to buy anything at the upcoming 4G spectrum auction.
Bidding in that auction is supposed to start early next year. Operators who win spectrum in the auction should be able to start using it for 4G services sometime in the second half of 2013.
"The regulator has shown a careless disregard for the best interests of consumers, businesses and the wider economy" — Vodafone
Ofcom said on Tuesday that it recognised its decision would give EE an early boost in the 4G market, but suggested this would only be a temporary advantage.
"Although we consider it likely that EE will enjoy a competitive advantage during the period before other operators are able to launch their own LTE [4G] services, we consider on the evidence available that any such advantage is unlikely to result in an enduring advantage which distorts competition to the detriment of consumers," Ofcom said.
"Our assessment takes account of the impending release of additional spectrum in the 800MHz and 2.6GHz bands which will enable other operators to launch competing LTE services during the course of 2013. We have also taken into account EE's obligation to divest itself of some its 1800MHz spectrum."
EE has so much 1800MHz spectrum because it represents the merged operations of T-Mobile UK and Orange UK. Getting rid of some of that spectrum was actually a condition of the merger, as set by the European Commission.
EE has two options for doing that: it can directly sell some of the 1800MHz spectrum to someone else — almost certainly Three — or it can put some into the 4G auction pot. If Three does buy the spectrum from EE before the auction, that would probably lead Ofcom to remove a guarantee that Three would get something in the auction.
However, Vodafone seems to suspect Three might buy the spectrum from EE, then hold up the auction with litigation to see whether it can still get some reserved 2.6GHz spectrum on top of that.
"It's in their interests to litigate to stop the auction," a Vodafone spokesman told ZDNet. "Our worry is that, since the [revised auction] rules came out [in July], Three has said nothing. They've basically been waiting."
"Ofcom should have said, 'Yes [EE] can liberalise the 2G spectrum after the auction, perhaps the day the auction closes. Then there wouldn't have been any incentive to anyone to delay the auction from happening," Vodafone's spokesman said.