Cutting Room: Spectrum issues


O2 and Vodafone are protecting their long-travelling 900MHz spectrum like precious booty.

Their reluctance to part with a small portion of the resource shows its value, and the competitiveness of the over-burdened UK market. Its theirs. Why should they?

But the only reason O2 and Vodafone have the 900MHz spectrum is because there were no other networks around at the time of its distribution. That is how they want it to stay.

A similar situation occurred when other European mobile markets were born, but other markets managed the original carve-up better – in some countries, the entire 900MHz spectrum wasn’t handed out immediately; some was kept back for new entrants.

Ofcom identified more than a year ago there could be problems if the UK’s two biggest networks retained a stranglehold on the most efficient spectrum available – efficient insofar as signals over 900MHz travel further than over higher bandwidth, so incumbents are not required to build so many base stations to join up coverage.

The debate surrounding the networks’ use of spectrum has been going on since September 2007, when Ofcom first announced it was looking to reallocate the 900MHz spectrum via an auction.

As it is now at the forefront of the Digital Britain report, it looks like one of the main factors infrastructure rollout will rely upon. Of course, there are other factors involved in Digital Britain, but as far as its mobile and broadband elements go, the reallocation of spectrum appears to be at the centre of bringing broadband to areas of the country where there currently is no access, and would be too expensive to extend fixed networks to.

The latest proposal being discussed is allowing Vodafone and O2 to keep their 900MHz safely in their pockets, but not allowing them to bid for the 800MHz that will become free when analogue television is switched over to digital in 2012 – and not likely to be refarmed until 2013, what with all the likely bureaucratic delays.

There are two major problems with this: Digital Britain’s goals are 2012, not 2013, and Vodafone allegedly wants part of the 800MHz real estate too.

If the lack of 900MHz could preclude Orange, T-Mobile and 3 hitting Digital Britain targets, then O2 and Vodafone have a clear market advantage in certain rural areas. T-Mobile shops in areas with no signal do not make good business sense, after all.

Surely that is a duopoly, where O2 and Vodafone will control prices and choke competition.

Surely Ofcom cannot let that happen, and will force O2 and Vodafone to cede part of the 900MHz spectrum in time for a 2012 Digital Britain, and perhaps reallocate parts of the 800MHz band ahead of the analogue switch off to enable Orange, T-Mobile and 3 to prepare and build their networks.

Ultimately, Digital Britain won’t get anywhere without a concerted mobile network push, backed by careful and innovative Government action. The entire proposal, and £10 billion of latest Budget money, hinges on O2 and Vodafone.