UPD3 Ofcom Shuns Concern to Let Orange UK and T-Mobile Launch 4G in 2012

The communications regulator, Ofcom, has today ignored threats of legal action from rival mobile operators by allowing T-Mobile and Orange UK (Everything Everywhere) to deploy superfast “4G” Mobile Broadband services over their existing 1800MHz radio spectrum.

Ofcom, which is under an EU Directive to ensure that the 1800MHz band can be used for 4G services, “provisionally” proposed to make the change in March 2012 (here) but was later forced to delay the move (here) after rivals O2, Vodafone and Three UK criticised the regulator for allowing EE to get a head-start on 4G. Rival operators will have to wait until late 2013 or early 2014 before they can launch 4G over the soon-to-be-auctioned 800MHz and 2.6GHz bands.

Ofcoms Statement on Today’s Decision

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.

Our assessment takes account of the impending release of additional spectrum in the 800 MHz and 2.6 GHz bands which will enable other operators to launch competing LTE services during the course of 2013. We have also taken into account EE’s obligation to divest itself of some its 1800 MHz spectrum.

In light of this assessment, and for the reasons explained in more detail in this decision, we consider that it is in the interests of consumers for us to vary EE’s licences now, in accordance with EE’s request.

As a result Ofcom has now issued EE with varied 1800MHz licences that will allow the operator to use either LTE and or WiMAX on the related spectrum from 11th September 2012. EE has of course made no secret of its desire to launch the first truly national 4G services before the end of this year; 1800MHz has a shorter range and thus usually works best in urban areas.

All eyes will now be on Three UK, which has repeatedly said that it’s desperate for new spectrum and hinted that it could take legal action unless the regulator addresses its competition concerns. Ofcom is also under similar pressure from O2 UK and Vodafone, which don’t want Three UK (the markets smallest operator) to be gifted a slice of the forthcoming 800MHz spectrum as currently proposed.

Meanwhile Ofcom has already allowed O2 to re-purpose its existing 900MHz spectrum for use by 3G services (legally O2 could use 900MHz for 4G too but they don’t have quite enough of the spectrum to make that work), which Three UK believes has given some rival operators an incentive to “defer that auction for as long as possible“. Expect more bickering to follow today’s announcement.

UPDATE 11:01am

As expected EE has told the BBC that Ofcom’s decision is “great news for the UK“, while O2 said that it was “hugely disappointed with today’s announcement, which will mean the majority of customers will be excluded from the first wave of digital services“. Likewise Vodafone felt 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” by allowing one operator to run 4G before the others.

UPDATE 22nd August 2012

In a new twist, albeit not an especially surprising one, EE has agreed to sell a slice of its 4G compatible 1800MHz spectrum to Three UK (here). But they won’t be able to use it for a year.

UPDATE 23rd August 2012

Just to 100% clarify some of the other reports going around. EE plan to launch a third new brand that “will sit alongside Orange and T-Mobile“. In a statement we were told, “Orange and T-Mobile will remain in the UK market for the foreseeable future and Everything Everywhere will continue to the company name and will be the company that runs all three brands.”