Legal Threats Cause Ofcom to Delay UK Auction of 2.3GHz and 3.4GHz

The UK telecoms regulator has today announced its intention to delay the start of their auction for 190MHz worth of prime Mobile Broadband spectrum in the 2.3GHz (2350MHz to 2390MHz) and 3.4GHz (3410MHz to 3600MHz) bands, which was due to commence this month.

Most of the spectrum, which does not come attached to a coverage obligation (higher frequencies aren’t ideal for coverage focused deployments), was formerly used by the Ministry of Defence (MoD) and is now being re-purposed for civil use.

However some have questioned the wisdom of proceeding with the auction before the final results of the two big mobile network merger deals are known. Admittedly the £12.5bn BT and EE merger now looks like a done deal and has already secured provisional approval (here), although the £10.25bn O2 and Three UK deal is in a considerably weaker position (here).

Ofcoms Statement

Since the Statement was published, the Competition and Markets Authority (“CMA”) has published its provisional findings on the proposed merger between BT Group plc and EE Limited. The European Commission has also announced its decision to launch an in-depth investigation into the proposed merger between Telefónica UK Limited and Hutchison 3G UK Limited. The CMA’s decision on the proposed merger of BT Group plc and EE Limited is expected in January 2016 and the Commission’s decision on the proposed merger of Telefónica UK Limited and Hutchison 3G UK Limited is expected no later than mid-May 2016.

In addition, on 19 and 20 November 2015, Ofcom received letters from Telefónica UK Limited and Hutchison 3G UK Limited respectively stating their intention to bring judicial review proceedings against Ofcom’s decision to commence the auction process before the outcome of the European Commission’s consideration of the proposed merger between those two companies.

After careful consideration, given these specific circumstances, we have decided for reasons of good public administration to delay commencing the auction process. Therefore, Ofcom will not now commence the auction process until the European Commission has taken its decision as to whether the proposed merger between Telefónica UK Limited and Hutchison 3G UK Limited is compatible with the common market.

Mobile operators are notorious for their use of legal threats to delay auctions or new legislation, which is one of the primary reasons why it took so long for the prior 4G auction (2.6GHz and 800MHz) to begin. Never the less in this case we can somewhat understand O2 and Three UK’s position as it would create an additional complication and at a pivotal moment in their process.