Three hits out at Ofcom's flip-flop on 4G spectrum
The operator has called Ofcom's change of heart on sub-1GHz spectrum 'irrational', arguing its rivals with a slice of that spectrum will have a 'natural competitive' advantage in 4G services
Three has described Ofcom's change of heart on sub-1GHz spectrum, which removed the operator's guarantee of a place in that spectrum, as "irrational" and "questionable".
Three has criticised Ofcom for its change of heart on how it doles out sought-after sub-1GHz spectrum for 4G services.Image credit: Jon Yeomans
The mobile operator's chief executive David Dyson on Tuesday called on the telecoms regulator to rethink its position on that spectrum, which he said has been accepted across Europe as the most suitable for 4G — the lower-frequency
spectrum is, the further the services that use it can travel.
"Ofcom did appear to have a solid position with respect to the
natural competitive advantages that low frequency enjoys, but now they
appear to have changed their view," Dyson told a Westminster eForum in
London. "It remains to be seen whether they will reconvene with a
decision that is more consistent with their European peers."
"A conclusion to the contrary would be irrational and questionable,
and unnecessarily risks future competition in the UK mobile market,"
he later added.
Sub-1GHz spectrum
Initially, the telecoms regulator viewed the sub-1GHz spectrum as
essential to any operator that wanted a fair chance of delivering 4G
services, as this kind of spectrum travels further and penetrates
deeper into buildings than higher frequencies can. Ofcom earmarked a
section for a 'fourth player' — which would almost certainly be
Three — after major operators Everything Everywhere, Vodafone
and O2.
However, Ofcom then carried out a technical assessment and had a
change of heart about how well other bands are suited to 4G usage. In
particular, it
said that having a "large quantity" of 1800MHz spectrum, along
with a "large number of base stations", could match the use of 800MHz
in terms of delivering 4G services.
As the merged operations of T-Mobile UK and Orange UK, Everything
Everywhere has a very large amount of 1800MHz spectrum. This was
originally set aside for 2G, but Ofcom is now open to it being used, or 'refarmed', for 4G as well.
However, as part of the European Commission's approval of the Everything Everywhere merger, the company has to sell off some of its 1800MHz
spectrum. That chunk of spectrum is likely to go into the same auction
pot as the 2.6GHz and 800MHz spectrum due to be sold off at the end of
this year.
If that happens, Three will lose its guarantee of gaining sub-1GHz
spectrum in the auction, as Ofcom reckons the operator will be able to make do
with some 1800MHz spectrum instead.
"Prior to 2G spectrum liberalisation, there was a healthy
competitive landscape for data, and all players in the market had
roughly equal access to 3G spectrum," Dyson said. "Post-liberalisation, the landscape is very different in terms of total spectrum and quality
of spectrum held. It is clear to me that a distortion of the
competitive landscape has occurred."
"Every other regulator in Europe has recognised [the technological
benefits of low-frequency spectrum]. In Austria, Ireland and the
Netherlands, low-frequency spectrum was withdrawn and re-auctioned
through a proper competitive process. In other European countries, 2G
spectrum has been re-allocated to ensure a more even balance across
the market. The UK remains undecided," Dyson added.
Refarming plans
The UK's spectrum auction is set to take place later in 2012. Ofcom
had previously given a deadline of 17 March for interested parties to
lodge concerns about Everything Everywhere's refarming plans, but on Tuesday
extended the deadline until 8 May.
It is clear to me that a distortion of the competitive landscape has occurred.
Vodafone and O2 also own some 1800MHz spectrum, but not nearly
enough as Everything Everywhere does. This means that, while they
could probably also get approval to refarm that spectrum for 4G use,
they already use all the 1800MHz spectrum they have for providing 2G
services.
In March, Vodafone said Ofcom had "taken
leave of its senses" in its decision to let Everything Everywhere
forge ahead with its 4G rollout before 2013.
Ofcom declined to offer comment on Dyson's speech, as the regulator
is still formulating its reply to the consultation responses it
received around the updated auction rules.
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