Vodafone welcomes Ofcom’s EE spectrum guarantee u-turn

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Second consultation document says Everything Everywhere should not be guaranteed 1GHz spectrum ahead of this years 4G auction. Three also set to benefit.

Ofcom has proposed that Everything Everywhere should not be guaranteed a slice of sub 1GHz spectrum when 4G spectrum is auctioned at the end of the year, in its latest consultation document on the auction released today (January 12).

Original proposals published in May suggested the auction should be structured in a way that ensured Everything Everywhere was certain to obtain spectrum in the 800MHz category.

However, it is now understood following analysis by Ofcom the regulator no longer believes that sub 1GHz spectrum is necessary to provide an effective 4G service.

EE is still able to bid for the spectrum in an open auction, and Ofcom said that the operator would also be able to apply to refarm existing 1800MHz spectrum it already holds for use for 4G services in time for the anticipated 2013 rollout of 4G.

In another move aimed at ensuring the proposals effectively maintain competition in the market, Ofcom has said it believes some spectrum should be reserved for a “fourth national wholesaler” other than O2, Vodafone or EE. This is understood to refer to Three.

Ofcom has also suggested reserving a part of the 2600MHz spectrum for use by other companies to deliver innovative new mobile services for consumers when the auction is held.

The regulator said these services could include the prevision of local mobile services in areas such as student campuses.

Other changes in the second draft of the proposals, which follow a six-month consultation, include extending a commitment to provide coverage to areas of the UK with poor mobile coverage, and taking into account additional factors when setting annual licences, which operators must pay on their existing spectrum.

Ofcom originally proposed that the operator which won one of the tranches of 800MHz spectrum would be required to deliver 95 per cent 4G coverage across the UK.

However, following the government’s announcement that it would provide £150 million to help improve coverage in underserved areas of the UK, Ofcom has proposed two ways in which the coverage requirement can be strengthened.

The first would simply increase the coverage commitment for whichever operator won the spectrum to 98 per cent.

The second option, which the regulator prefers, would see the commitment extended to include delivering 4G coverage in “not spot” areas not currently covered by any mobile signal.

The cost of building this infrastructure could be covered, at least in part, by the £150 million funding announced by the government.

The regulator has also tweaked its recommendations on how to set annual licence fees for spectrum that the operators already hold, suggesting that additional factors such as international benchmarks could be used alongside other measures such as the amount paid for similar spectrum in the auction to help set the fees.

Ofcom CEO Ed Richards (pictured) said: “This is a crucial step in preparing for the most significant spectrum release in the UK for many years. The proposals published today will influence the provision of services to consumers for the next decade and beyond.

“The UK benefits from being one of the most competitive mobile phone markets in Europe. This means that consumers pay less for mobile communications services and have the choice to shop around for packages that suit them best.

“As the UK enters a new generation of mobile communications, Ofcom’s objective is to promote effective competition and to stimulate both investment and innovation.

“In addition we are proposing a significant enhancement of mobile broadband, extending 4G coverage beyond levels of existing 2G coverage – helping to serve many areas of the UK that have traditionally been underserved by network coverage.”

A Vodafone spokesperson added: “We welcome Ofcom’s revised proposals, which bring the UK closer to a fair and open auction that will benefit the wider economy, increase competition and ultimately lead to the creation of innovative and exciting new services for consumers.

“We share the regulator’s desire to see mobile internet services placed within the reach of many more people in rural areas and have already shown our commitment to improving coverage through the use of innovative technology.

“Ofcom has produced a lengthy document and we need to understand the regulator’s rationale for protecting a fourth operator, but it has made significant steps towards bringing 4G services to this country.

“In the UK, Vodafone has already moved well beyond the testing phase for 4G. We have run three trials of the technology in the UK over the last three years and the international team of engineers who launched Vodafone’s 4G network in Germany over a year ago are already in this country, working closely with our own technical specialists.

An EE spokesperson said: “Everything Everywhere is very disappointed to see that Ofcom has again reversed its proposal to ensure all mobile operators hold a minimum amount of sub 1GHz spectrum. Ofcom is missing a huge opportunity for the UK to address the imbalance in sub 1GHz spectrum holdings, which has damaged consumer interests for the last 20 years – and is a situation which is now threatening to continue.

“The importance of sub 1GHz spectrum, which delivers service and cost benefits, has been recognised by other regulators across Europe and supported by economic analysis. All of the regulators bar Ofcom have made vigorous efforts to support healthy and sustainable competition by ensuring that the imbalance of sub 1GHz holdings is redressed.”

Mobile network infrastructure provider Arqiva has also commented on the consultation document, welcoming the provisions for extending coverage to poorly served areas, but saying they do not go far enough.

A spokesperson said: “If Ofcom decides to place the coverage obligation on only one operator, many consumers in rural areas will receive a second-tier broadband service and will be denied the benefits of competition available to those who live elsewhere.

“We fully support Ofcom’s view that wireless technologies, fixed and mobile, can play an important role in serving rural areas and offer a practical and cost-effective means of reaching consumers in remote areas.

“This auction provides an opportunity for the whole country to benefit from high-speed data networks and we very much hope that it can now proceed without further delay.”

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