Everything Everywhere plans to use money it makes from selling some of its 2G spectrum to invest in its own network.
Everything Everywhere has said it will reinvest the money it makes from selling some of its 2G spectrum into its own network.Photo credit: Karen Friar
The mobile operator, which runs the T-Mobile and Orange brands in
the UK, made the promise on Friday in response to a call by MPs for the reinvestment. The call came in a report on Thursday from the Culture, Media and Sport select committee, which also made a wider set
of recommendations to do with spectrum.
The 2G spectrum sale is a condition of the
merger of the UK operations of Deutsche Telekom and France Telecom, which took place last year. The European Commission insisted
that Everything Everywhere would have to give up a quarter of the
60MHz of 1800MHz spectrum it holds, to make sure the combined company
would not be overly dominant.
In its report, the select committee said the government and
Ofcom should investigate ways to ensure the proceeds of the spectrum sale
"be used to the benefit of consumers", given that the government gave
operators the spectrum — a public asset — for next to
nothing back in the 1990s.
"Ofcom should explore whether it could compel Everything Everywhere
to ring-fence a proportion of this windfall for investment in its
network," the MPs recommended.
In response, Everything Everywhere said that it planned to
do that anyway, and that it would even go so far as to reinvest all
the money, not just some of it.
"It is our intention that all proceeds from the sale of this
spectrum will be invested into our UK network to benefit our customers
across the country," the operator said in a statement.
Recent changes could affect how much Everything Everywhere makes from the sale. Right now, it pays £33m in licence fees to the
government each year for its 1800MHz spectrum. However, as 2G
spectrum can now be 'refarmed' for 3G use, Ofcom is likely to increase
those licence fees once the upcoming '4G' spectrum auction has taken place. This could
lead prospective 2G buyers to offer less.
4G auction delays
The 4G auction, which was initially scheduled to take place in September 2008, is now likely to start in the
fourth quarter of 2012. The latest delay, caused as usual by operator
squabbling, was announced in early October. In that announcement, Ofcom said it will have to run yet another consultation on the matter, following "a
number of substantial and strongly argued responses" to the last
The basic rules for the auction which Ofcom has laid down are sensible and fair, and that further delays will result in the UK falling further behind in this vital area.– John Whittingdale MP
Culture secretary Jeremy Hunt pleaded
with the operators in September to settle their differences and
let the auction go ahead. The select committee echoed Hunt's call in its report.
"Ofcom has had a very difficult job adjudicating between competing
and polarised interests, and we are concerned that constant
disagreement and special pleading from the four mobile network
operators appears to have further delayed the spectrum auction,"
committee chair John Whittingdale MP said in a statement.
"We believe that the basic rules for the auction which Ofcom has
laid down are sensible and fair, and that further delays will result
in the UK falling further behind in this vital area. The auction needs
to proceed as soon as possible," Whittingdale continued.
Everything Everywhere responded by saying: "We fully support
industry collaboration to ensure that the forthcoming spectrum
auctions are held as soon as possible so the benefits of faster data
speeds reach consumers quickly, but understand that the complexity of
the issues involved has meant that further consultation about the
auction rules by Ofcom has been necessary."
According to operator testimony cited in the report, taking
coverage beyond 95 percent can be done, and the main concern is
"The evidence that we have heard suggests that a 99-percent
coverage obligation, although achievable, would cost up to £230
million, and we are concerned that that cost could be transferred to
consumers," the report stated. "Therefore we support the unanimous
decision made by the House in May 2011 and recommend that Ofcom
imposes a coverage obligation of 98 percent on one or more of the 800
MHz licences being auctioned."
Get the latest technology news and analysis, blogs and reviewsdelivered directly to your inbox with ="http:>ZDNet UK'snewsletters.