O2 UK Will Ask Competition Tribunal to Halt Early 4G Release on 1800MHz

Mobile operator O2 UK (Telefonica) has given notice of its plan to lodge a challenge at the Competition Appeals Tribunal (CAT), which aims to halt Everything Everywhere (Orange UK and T-Mobile) from an early deployment of superfast “4G” Mobile Broadband services over their existing 1800MHz radio spectrum.

The communications regulator, Ofcom, granted EE permission to re-purpose the 1800MHz band for use by 4G (Long Term Evolution) based services earlier this month (here). Crucially the move would allow both Orange UK and T-Mobile to deploy related services by the end of 2012 or early 2013, while their rivals would instead have to wait until late 2013 or early 2014 to launch similar services via the 800MHz and 2.6GHz bands.

Since then EE has also moved to sell some of its prized 1800MHz spectrum to rival Three UK (here), which helped to placate the concerns of at least one other operator. As a caveat Three UK would not be able to deploy similar services over the band until at least September 2013 (the latest date required by Europe), which safeguards EE’s head-start.

Ofcoms August 21st Statement

Although we consider it likely that EE will enjoy a competitive advantage during the period before other operators are able to launch their own LTE services, we consider on the evidence available that any such advantage is unlikely to result in an enduring advantage which distorts competition to the detriment of consumers.

Naturally O2, which would be forced to wait, warned that the decision could “undermine the competitive environment” for 4G in the UK and exclude “the majority of consumers” from the first wave of faster Mobile Broadband services. Vodafone echoed their remarks and said that Ofcom had, “shown a careless disregard for the best interests of consumers, businesses and the wider economy through its refusal to properly regard the competitive distortion created“.

According to The Guardian, O2 has done more than merely announce its plan to appeal the decision. The operator has allegedly also issued an “ultimatum” to EE that called on them to halt their planned launch of 4G over 1800MHz in 2012.. or else. That’s unlikely to go down well with EE, which has taken an equally tough stance.

Olaf Swantee, CEO of Everything Everywhere, warned:

“I will commit here and now to support the auction process, even though there are aspects of the auction rules that we don’t like. However, and I am hoping it doesn’t come to this, if there is litigation against Ofcom’s ruling, we will have no choice but to review our position.”

The UK governments Secretary of State for the Department of Culture, Media and Sport (DCMS), Jeremy Hunt MP, warned last year that, “Mobile phone operators must put aside competitive differences and work together in their common – and our national – interest to make [the 4G auction process] happen” (here). But Hunt stopped short of threatening any legislative intervention to disarm the often childish bickering between operators.

In reality our sources suggest that Ofcom is privately understood to have been preparing for this eventuality. The regulator also has an EU Directive on its side, which requires member states to “implement as soon as possible” the ability to launch 4G/LTE or WiMAX services over the 1800MHz band in order to tackle “increasing market demand“.

As it stands now the auction process could potentially face more delays, although we’d still be surprised if the actual release of spectrum suffered a similar problem. Ofcom has allowed time between the auction and spectrum release, which many believe is designed to cope with just this eventuality.