‘Someone will lose in this spectrum fight’


Everything Everywhere claims tacit victory in battle over radio spectrum to anger rivals Vodafone and O2

The fight between UK operators over radio spectrum was no nearer a conclusion last week, despite Everything Everywhere’s withdrawal of a threat of legal action against the Government over its conditions for the auction of ‘next generation’ spectrum.

Joint venture Everything Everywhere dropped its threat of legal action on the grounds it is “confident” Ofcom will consider a disparity it perceives in the allocation of 900MHz band when it auctions 800MHz and 2.6GHz spectrum in late 2011/early 2012.

The threat was raised after the coalition Government retained the detail of Labour’s proposal, which said the merger of Orange and T-Mobile, with combined 1800MHz bandwidth, put them on level with Vodafone and O2, holders of the 900MHz band. An Ofcom statement late October said it had not changed its stance that the joint venture had removed any 900 MHz advantage.

But last week Everything Everywhere, which has drafted in former spectrum broker Kip Meek as advisor, said meetings with Communications Minister Ed Vaizey had encouraged it to stand down its legal threat. It said Vaizey had made tacit public reference to an imbalance in spectrum allocation, as well as clear private reference. A spokesperson said: “Ed Vaizey recognises that not having access to sub- 1GHz spectrum is a significant issue for us.”

Vodafone and O2 refused to comment on the matter. Both will fight any conditions imposed upon their 900MHz spectrum as part of the bidding rules Ofcom is to set out in the first half of 2011 before the 800MHz auction. One operator source remarked: “Someone will lose in all of this. Everything Everywhere will lobby to see the imbalance it sees is put right, and Vodafone and O2 will lobby to retain their spectrum and to take share of the 800MHz band. No party will back down. Something has to give.”

Ovum telecoms analyst Matthew Howett said: “The award of new spectrum will not happen until Ofcom solves this dispute.”

Market watchers suggested if Ofcom acts on Everything Everywhere’s concern it could force Vodafone and O2 to divest some 900MHz spectrum, increase licence fees for it or else restrict their bids on the 800MHz band.

Meanwhile, Ofcom has proposed the liberalisation of 900MHz and 1800MHz spectrum for UMTS (3G) services. Analysts said last week that, while UK operators continue to struggle with coverage and run such GSM (2G) traffic, the availability of spectrum for UMTS was incidental to the auction of bandwidth for LTE.

Coleago Consulting director Scott McKenzie said: “There is a big crunch coming in spectrum for mobile data. Ofcom is just reshuffling the deck chairs on the Titanic. Ofcom needs to get on with the auction of 800MHz and 2.6Ghz spectrum.”

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