Operator dispute as snap spectrum auction called

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Government requests Ofcom calls 2011 spectrum auction, but Three bristles still at Vodafone/O2 monopoly of choice 900MHz bandwidth
Operator Three has voiced dissatisfaction with the government’s bid to drive through a combined auction of 800MHz and 2.6GHz spectrum, for mobile broadband and LTE, on the grounds valuable 900MHz spectrum will not be redistributed evenly in the process.

Vodafone and O2, by virtue of their early time to market, both have a chunk of 900MHz spectrum, powerful for long distance transmissions.

The new UK coalition government laid down a statutory instrument last week instructing Ofcom to co-ordinate an auction of 800MHz and 2.6GHz spectrum “as soon as possible”, but made no reference to discussions on the table under the previous Labour government to examine distribution of the 900MHz band.

Three UK chief executive Kevin Russell (pictured) said: “It is critical for UK consumers that in setting out the auction process Ofcom addresses the distortions now created by allowing the incumbent operators to retain full access to 2G spectrum.

“Competition puts mobile broadband into the hands of millions, without it service quality and price will be jeopardised.”

Everything Everywhere, which combined Orange and T-Mobile and runs off the 1800MHz band only, is likely to have reservations about retention of the 900MHz spectrum, also.

Mobile operators will be able to bid for new spectrum to enable improved wireless broadband services, and to pave the way for a 4G network following the auction next year.

Existing 3G licences will be extended indefinitely, but holders will have to pay annual licence fees at a price determined by Ofcom.

Rival operators praised the move.

Vodafone UK chief executive Guy Laurence said: “This is a smart move from the new government, which has taken the time to consider the complex and far reaching implications of spectrum allocation in the UK.

“We are looking forward to working constructively with Ofcom to ensure that network operators have a fair opportunity to buy the spectrum required to compete effectively in the UK market. A timely resolution is in the interests of developing and supporting the economy and delivering advanced mobile services to customers.”

An O2 spokesperson said: “O2 welcomes the new Government’s decision to rationalise the draft spectrum Directions to Ofcom. The new Government now accepts that the merger of T-Mobile and Orange has changed the basis under which previous competitive assessments by Ofcom have been undertaken.

“We believe the Government is right to direct Ofcom to allow O2 to deploy UMTS900, without condition, and require Ofcom to conduct a new competition assessment in relation to future auctions, in light of all the new information available to it.”

Communications minister Ed Vaizey said: “Under our plans, our industry will have access to the 21st century infrastructure it needs to give UK consumers the latest technologies and even better coverage for broadband on their mobile phones.”

The previous government hadn’t been successful in getting parliamentary approval to begin the auction process and in May O2 began legal action against Ofcom as it felt it was taking too long to rule on whether it could use old spectrum for new 3G devices.

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