The head of the UK's telecoms regulator has accused operators of 'gaming the system' in the run-up to the 4G spectrum auction, and warned their perpetual threats of litigation over the auction could lead the government to take back regulatory powers.
Ofcom chief executive Ed Richards, pictured in March, has said UK operators are 'gaming the system' in the run-up to the 4G spectrum auction. Photo credit: David Meyer
which will allow fast
mobile broadband services to be rolled out in the UK on the 800MHz
and 2.6GHz bands, was supposed to have happened three
years ago. However, constant legal threats by various operators,
all of whom feel aggrieved by the auction mechanism in one way or
another, have caused multiple delays.
It is "very disappointing to witness the
extent to which the incumbent mobile operators have chosen to entangle
this process in litigation or threats of litigation", Ofcom
chief Ed Richards said in a
speech given on Tuesday at a European Competitive
Telecommunication Association (Ecta) regulatory conference.
"We recognise, of course, the need for companies to defend their
commercial interests and to have recourse to the law in order to do
so," Richards said. "But when litigation becomes essentially strategic
rather than based on objective grounds, and when it has the effect of
holding back innovation and hampering growth, it is legitimate to ask
whether the overall legislative framework fully supports the public
interest in this increasingly vital area."
Richards pointed to a Culture, Media and Sport select committee
report earlier this month, in which committee chair John Whittingdale MP said "constant disagreement and special pleading from the four mobile
network operators appears to have further delayed the spectrum
The committee said the auction had to proceed
as soon as possible, as did culture secretary Jeremy Hunt, who said
in September that "mobile phone operators must put aside
competitive differences and work together in their common — and
our national — interest".
Richards warned in his speech that the situation could push authorities into taking regulatory powers in the sector out of Ofcom's hands. "This may well be a consideration as British lawmakers consider
their approach to a promised new communications bill for the UK,"
"I think some major companies will have to
reflect upon whether they have inadvertently jeopardised the benefits
of objective, independent regulation in this area by virtue of their
willingness to game the system."
The Ofcom chief suggested that "legislators would be all too
willing to accept an argument which returns power in such matters to
politicians, in light of the apparent inability of the current model
to make timely decisions where the national interest is at stake".
Richards said Ofcom still intended to hold
the spectrum auction in the second half of next year. The slow pace of the 4G auction process in the UK has had some
positive effects, namely in letting operators here learn from rollouts
elsewhere in the world. However, more than a dozen countries from
Kenya to South Korea are all now deep into their deployments, and the
UK is still only at the testing
A study published in October estimated that the UK was losing
out on £730m a year in improved productivity due to the auction
O2, which is one of the operators that has in the past launched litigation against the auction process, said the current stage of debating Ofcom's auction rules was intended to "highlight any substantive flaws in Ofcom's proposals".
"We have taken the opportunity to contribute to this process," an O2 spokesperson told ZDNet UK. "Ofcom's decision to re-consult reflects the very real concerns we and other stakeholders have about the March consultation."
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