{"id":19240,"date":"2019-08-12T08:25:54","date_gmt":"2019-08-12T07:25:54","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=19240"},"modified":"2019-08-12T08:31:24","modified_gmt":"2019-08-12T07:31:24","slug":"o2-and-three-uk-clash-over-ofcom-5g-spectrum-defragmentation-plan","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2019\/08\/o2-and-three-uk-clash-over-ofcom-5g-spectrum-defragmentation-plan.html","title":{"rendered":"O2 and Three UK Clash Over Ofcom 5G Spectrum Defragmentation Plan"},"content":{"rendered":"

Mobile operator O2<\/a> (Telefonica) has criticised Ofcom<\/a>’s recent proposal to defragment the 5G<\/a> ultrafast mobile broadband friendly 3.4-3.8GHz radio spectrum bands after next year’s auction, which they complain favours Three UK<\/a> (H3G) by allowing them to establish a “kingmaker<\/em>” position from where they can obstruct rivals.<\/p>\n

Previously Three UK<\/a> was at somewhat of a disadvantage in the market – partly of its own making – because they didn’t hold anything like as much mobile friendly spectrum as their rivals at EE<\/a>, Vodafone<\/a> and O2<\/a>. Part of Ofcom<\/a>’s work over the past few years has thus been orientated around trying to rebalance the market in order to make the differences in spectrum ownership between network operators less dramatic.<\/p>\n

The amount and type of spectrum that an operator has is crucial for all sorts of reasons, not least because it can have an impact upon network coverage, rollout costs and particularly data performance (mobile broadband speed). However Three UK<\/a> is in a different position when it comes to 5G<\/a> because they already harbour 140MHz of related spectrum, including a single 100MHz contiguous block (rivals tend to have 50MHz or 40MHz blocks).<\/p>\n

Ofcom<\/a> says that 5G<\/a> is “likely to perform best using large, contiguous blocks of spectrum<\/em>,” although the main advantage of this is that it avoids higher equipment costs (e.g. operators can use a single antennae, rather than several for bands that are wide apart). A few short months ago the regulator proposed to defragment the 3.4GHz – 3.8GHz<\/strong> radio spectrum bands in order to bring such benefits to other operators (here<\/a>).<\/p>\n

\"ofcom_5g_uk_spectrum_fragmentation_june_2019\"<\/div>\n

Assuming no change then the next auction in the 3.6GHz – 3.8GHz band(s) will only free up 120MHz of spectrum frequency (i.e. not enough to give more than a single operator access to a contiguous holding of 80MHz). In response Ofcom proposed a mechanism for spectrum trading<\/strong>, which of course would require mobile operators to play nice and fair (not so easy in an aggressively competitive market).<\/p>\n

Ofcom’s Defragmentation Proposal<\/strong><\/p>\n

In order to facilitate defragmentation of the 3.4-3.8 GHz band, we are minded to impose a restriction on winners of less than 20MHz of 3.6-3.8 GHz spectrum to bidding only for the top or bottom of the 3.6-3.8 GHz band in the assignment stage of the auction.<\/p>\n

In addition, we are also minded to include a negotiation phase, within the assignment stage of the auction, during which winners of 3.6-3.8 GHz spectrum would have the opportunity to agree the assignment of frequencies in the 3.6-3.8 GHz band between themselves.<\/p><\/blockquote>\n

NOTE:<\/strong> Under the existing plan winners must unanimously agree the new allocations, but there is a fallback option of partial agreement between a subset of winners.<\/div>\n

In its first response O2<\/a> has accused Ofcom of placing “far too much faith in the secondary market to address fragmentation<\/em>” and warned of a “high risk that trading amongst the MNOs will not resolve the situation<\/em>,” not least because the interests of all operators are NOT currently aligned.<\/p>\n

“Unfortunately, Ofcom’s policies to date have favoured one operator, [Three UK], allowing it to establish a \u2018kingmaker\u2019 position, from which it can attempt to extract windfall gains from rivals in return for moving its spectrum, or otherwise expect anti-competitive rents from blocking rivals from acquiring larger contiguous blocks<\/em>,” said O2.<\/p>\n

Naturally Three UK supports Ofcom’s plan, although they want all holders of 3.4-3.8GHz spectrum to participate in the negotiation phase and favour the regulator’s first of two proposals, which requires winners to unanimously agree the new allocations. Ofcom’s second proposal, which Three UK does not support, is one where if the winners fail to reach unanimous agreement then a fallback position is to allow partial agreement between a subset of winners.<\/p>\n

However Three UK warns that allowing partial agreement as a fallback could create problems. “Two MNOs could deliberately fail to reach unanimous agreement, safe in the knowledge that they could guarantee being awarded adjacent 3.6GHz spectrum and then trade their 3.4GHz and 3.6GHz spectrum after the auction. By doing this, they would get contiguity for free but crucially, the third MNO would not get contiguity<\/em>,” said the operator.<\/p>\n

Similarly Vodafone<\/a> said they “profoundly disagree<\/em>” with the proposals to allow agreement by a subset of bidders to influence operation of the assignment stage (but they do support unanimity in the negotiation phase). “The approach set out in the consultation is discriminatory against Vodafone<\/a>, hence is unacceptable<\/em>,” said the operator.<\/p>\n

BT<\/a> (EE<\/a>) disagreed with the above and said it was “important<\/em>” for Ofcom to include “the further option of exploring whether partial agreement between a subset (or subsets) of winners can be achieved<\/em>.” As usual all of the mobile operators have given a perspective that is based on the potential impact upon their own respective market positions, which is much as we’d expect.<\/p>\n

Ofcom’s final decision on the upcoming award of spectrum in the 700MHz and 3.6-3.8GHz bands is expected later this year. At present the goal is still to conduct the auction next Spring 2020, at least the regulator hasn\u2019t yet said anything different but delays seem to be par for the course in mobile land where aggressive competition tends to make reaching unanimous agreements rather difficult.<\/p>\n","protected":false},"excerpt":{"rendered":"

Mobile operator O2 (Telefonica) has criticised Ofcom’s recent proposal to defragment the 5G ultrafast mobile broadband friendly 3.4-3.8GHz radio spectrum bands after next year’s auction, which they complain favours Three UK (H3G) by allowing them to establish a “kingmaker” position from where they can obstruct rivals.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1],"tags":[406,474,405,32,36,63,96],"class_list":["post-19240","post","type-post","status-publish","format-standard","hentry","category-uk_isp_news","tag-5g","tag-bt","tag-ee","tag-o2","tag-ofcom-regulation","tag-three-uk","tag-vodafone"],"share_on_mastodon":{"url":"","error":""},"yoast_head":"\nO2 and Three UK Clash Over Ofcom 5G Spectrum Defragmentation Plan - ISPreview UK<\/title>\n<meta name=\"description\" content=\"Mobile operator O2 (Telefonica) has criticised Ofcom's recent proposal to defragment the 5G ultrafast mobile broadband friendly 3.4-3.8GHz radio spectrum\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ispreview.co.uk\/index.php\/2019\/08\/o2-and-three-uk-clash-over-ofcom-5g-spectrum-defragmentation-plan.html\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"O2 and Three UK Clash Over Ofcom 5G Spectrum Defragmentation Plan - 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