Vodafone lobbies government to influence 4G auction

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Private email to government official urges action on spectrum fees linked with upcoming 4G auction

Vodafone has asked the Department for Culture Media and Sport (DCMS) to pressure Ofcom not to link annual spectrum fees to the forthcoming 4G auction.

If annual fees were linked to 4G auction prices, Vodafone and O2 could end up paying hundreds of millions of pounds more for existing spectrum.

The email was sent on October 17 this year to an unnamed official at DCMS by Vodafone’s head of government affairs Paul Morris. In the email Morris encourages the government to influence Ofcom’s decision on setting annual spectrum fees.

Morris wrote: “The linking of the annual spectrum fees paid by Vodafone with the amounts paid in the auction is an extremely serious problem and needs addressing to ensure a fair and successful auction. This may  appear to be a technical point but it is one that needs to be got right when establishing the rules for the auction.

“As the auction rules are finalised, we believe that this is an issue where the government has the opportunity to ensure that the regulator understands that HMG (Her Majesty’s government) is comfortable with the change.

“We propose that the auction should take place and then the annual fees should be reviewed in the usual manner.”

A Vodafone spokesperson said the email reflects Vodafone’s belief that the government must ensure Ofcom is dealing with the spectrum auction and the setting of fees in the way the government originally intended.

Ofcom declined to comment on the Vodafone email. However, last week Ofcom CEO Ed Richards criticised operators for using the threat of litigation to influence the auction and their attempts to “game the system”.

“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,” said Richards in a speech.

The DCMS select committee has said “constant disagreement and special pleading” by operators over the spectrum auction has contributed to the auction being delayed.

The committee said that the current proposals are fair.

Morris also criticised attempts by Ofcom to weight the auction so all four mobile operators could remain viable.

“Given the current economic situation and the fact that all the mobile network operators are successful global companies, this is an opportunity to let the auction run freely and ensure a level playing field without special help for any particular mobile network operator,” he stated.

Morris also requested a meeting with secretary of state Jeremy Hunt (pictured).

Hunt said in March that he would hold a round-table meeting with all four operators. However, in October he told the DCMS select committee that it had been decided that individual meetings would be more appropriate.

Since then, only representatives from Everything Everywhere have met with Hunt, who is understood to have invited Treasury representatives.

The DCMS said other meetings were “being arranged”, however it is understood that at least two of the remaining operators have not received a meeting date.

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