O2 UK Criticises Ofcom for Allowing T-Mobile and Orange to Offer 4G in 2012

Mobile operator O2 UK (Telefonica) has warned that Ofcom’s plan to auction off the 800MHz and 2.6GHz radio spectrum frequencies, which would be used by a new generation of 4G superfast Mobile Broadband services, could be put at “further risk of delay” after the regulator allowed T-Mobile and Orange UK (Everything Everywhere) to launch the country’s first 4G service over their existing 1800MHz (3G) band.

The move has already provoked heavy criticism from Vodafone (here), which suggested that Ofcom had “[taken] leave of its senses” because the decision could allow Everything Everywhere to “bog down” the 4G spectrum auction process (due to get underway in Q4-2012) in litigation and thus gain a competitive advantage.

O2 Statement

“From the very start of this process, Ofcom has said that the UK must retain a competitive market environment and that it will remove the ability for operators to behave strategically over spectrum allocation.

To this end, Ofcom’s auction proposals had much to commend them, and we were minded to support a small spectrum reservation for Hutchison or a new entrant, if Ofcom could make a stronger case for four players.

However, we are concerned that Ofcom’s other proposal to allow one operator to launch 4G early on its existing spectrum is contradictory to its objective of delivering a competitive market environment with four competing players. This could expose the process to further risk of delay.”

Naturally neither Vodafone nor O2 are keen on the idea of their arch rival being given a headstart. Meanwhile Ofcom firmly believes that there is “no material risk of a distortion of competition” and Everything Everywhere even withdrew its “threatened legal action” against the auction process well over a year ago (here). The European Commission (EC) has also made clear that EU regulators should allow mobile operators to repurpose both 900MHz and 1800MHz for 4G as appropriate.

Separately O2, which is known to have been one of the auction processes biggest opponents, has already been allowed to use its valuable 900MHz spectrum (i.e. costs less to deliver coverage over a wider area) for Mobile Broadband (3G) services and could one day even adapt that for 4G.

Leading politicians have repeatedly warned mobile operators to set aside their squabbles and work together, though there has been no threat of any new legislation. Yet. Ofcom’s 1800MHz approval remains subject to a short consultation until 17th April 2012.