13 July 2017
| James Pearce
UK regulator Ofcom has introduced additional caps on spectrum holdings for future auctions, but Three UK has said the decision is a "kick in the teeth" for consumers
Three UK has hit out at an Ofcom decision
to introduce only some limitations on an upcoming 5G spectrum
auction, claiming the regulator has not gone far enough.
The CK Hutchison-owned mobile operator
said Ofcom’s decision was "a kick in the teeth"
for UK consumers, claiming it could "push up prices" by
favouring the largest operators, most notably BT (through
mobile arm EE) and Vodafone. It follows a
long campaign from Three aimed at getting Ofcom to
introduce caps at upcoming spectrum auctions.
40MHz of spectrum will be auctioned off in
the 2.3GHz band, while 150MHz of 3.4GHz spectrum will also be
made available in the auction due to take place later this
year. Both bands are expected to play a key role in 5G
technologies, but a number of operators had challenged Ofcom to
limit how much spectrum BT and EE could acquire.
Following a review, the regulator has imposed two different
restrictions on bidders. The first will see the amount of
"immediately useable" spectrum available to any operator capped
at 255MHz, which will prevent BT/EE from bidding on the 2.3GHz
The second restriction will see an
additional cap of 340MHz introduced on the overall amount of
spectrum a single operator can hold as a result of the auction
– the equivalent of 37% of all mobile spectrum
expected to be useable by 2020.
The cap means BT can only bid for a
maximum of 85MHz of spectrum in the 3.4GHz band, while also
limiting Vodafone to a maximum of 160MHz across both bands due
to be auctioned.
The caps will also apply to the 700MHz
Ofcom said it will continue to make available for mobile in
2020. This band is seen as ideal for boosting rural
coverage, as well as strengthening signal for deep inside
Philip Marnick, Ofcom’s
Spectrum Group Director, said: "Spectrum is a vital resource
that fuels the UK’s economy. We’ve
designed this auction to ensure that people and businesses
continue to benefit from strong competition for mobile
"We want to see this spectrum in use as
soon as possible. With smartphones and tablets using even more
data, people need a choice of fast and reliable mobile
networks. These new airwaves will support better services for
mobile users, and allow operators to innovate and build for the
Kick in the teeth
Despite Ofcom going further than it
originally planned, Three CEO Dave Dyson was still unhappy,
implying the operator could take further measures to prevent BT
and Vodafone from accumulating more spectrum.
Three had launched a massive marketing
campaign - "Make the Air Fair" - hoping to put pressure on
Ofcom boss Sharon White to rebalance spectrum in the UK, and
although Ofcom has responded, Three claims it has not gone far
Dyson said: ""Ofcom’s
proposal is a kick in the teeth for all consumers and in
particular for the near-200,000 people who signed up to the
'Make the Air Fair' campaign.
"By making decisions that increase the
dominance of the largest operators, Ofcom is damaging
competition, restricting choice and pushing prices up for the
very consumers that it is meant to protect.
"The mobile market is imbalanced and
failing customers. Ofcom has shown little interest in tackling
the problem. We will consider our response as a matter of
When Three first launched the Make The Air
Fair campaign, which included a cartoon version of Ofcom chief
White, it claimed BT held around 42% of all useable UK
spectrum, while Vodafone’s share was 29%. Three
itself holds around 15%, although this doesn’t
include spectrum it acquired with its
purchase of UK Broadband, while Telefonica’s
O2 held around 14%.
Three and its campaign partners, including
wholesaler CityFibre, Gamma Telecom, and TalkTalk, called on
Ofcom to limit spectrum shareholding to a maximum of 30% in
order to rebalance the market.
EE wasn't happy with the decision either,
but said it was not looking to delay the process. In a
statement, CEO Marc Allera said: "While we don't agree that
spectrum caps were necessary for this auction, our focus
remains on investing in our network, using our existing and
future spectrum to provide the best mobile experience for our
customers across the UK. We look forward to bidding for
additional spectrum in this auction."
Dyson’s claim that
Three is considering its response shows the operator may not
take Ofcom’s decision lying down. Whether this
will lead to an appeal or to a legal challenge remains to be
seen, but any such action could lead to a delay in the auction
process, something that seems to be opposed by
O2, Telefonica’s UK mobile
operation, also claimed Ofcom has not gone far enough with its
ruling. In a statement, Telefonica UK CEO Mark Evans said:
""The announcement from Ofcom falls short of our expectations
but it is important we now press ahead with the auction quickly
so that the spectrum can be obtained by operators that will
deploy it for the benefit of consumers, businesses and
ultimately UK plc."
A number of vendors have already fired
warning that Europe faces lagging behind the United States and
a number of APAC markets in deploying next generation mobile
tech such as 5G due to regulatory delays. If Three presses
ahead with an appeal, the UK could face the problem, with too
little 5G spectrum available to launch the service in 2019, as
is currently planned by BT’s EE.
Even if Three does find some way of
appealing against Ofcom’s decision, there is no
indication as to what the outcome would be. There can be no
doubt that the current allocation of spectrum is unbalanced
– Make the Air Fair claims the UK is one of the most
unbalanced markets in the world when it comes to spectrum
allocation – but the impact of this is difficult to
Both Vodafone and EE have recently
unveiled plans for Gigabit LTE services, and deploying these
kinds of services is no doubt easier when you have significant
spectrum holdings, so arguably this gives them a competitive
advantage. Three’s claim that the imbalance causes
price rises for consumers is much less clear.
Either way, Ofcom has acted after much
lobbying from the Hutch OpCo, but it seems no-one is 100% happy
with the regulator’s ruling.
GTB contacted Vodafone UK about
this story and is awaiting a statement from the