UK Spectrum Auction: Legal Threat from 02UK?

The UK government has issued a warning to O2 UK not to derail the country’s upcoming LTE spectrum auctions with the threat of legal action. The Telefonica-owned operator suggested last week it is mulling legal action on the basis that the auction rules unfairly benefit some of its rivals, enabling them to pick up valuable sub-1GHz spectrum at discounted rates.

O2, owned by Spain’s Telefónica, says that Ofcom’s belief that 800MHz and 900MHz are comparable is mistaken. O2 and Vodafone UK already hold 900MHz licenses, which will mean rivals Everything Everywhere (a 50-50 joint venture between Deutsche Telekom and France Télécom ) and 3 UK (owned by Hong Kong-based Hutchison Whampoa), will be able to acquire more of the 800MHz spectrum up for auction at better rates – a situation that O2 says would constitute state aid and would therefore be illegal under EU law.

Ofcom is auctioning spectrum in the 800 MHz and 2.6 GHz bands for 4G services. It will be the largest ever single auction for mobile spectrum in the UK, equivalent to three quarters of the mobile spectrum in use today and 80% more than the 3G auction which took place in 2000.

Ofcom proposed two spectrum caps:

  • A sub 1GHz safeguard cap of 2×27.5 MHz, which will mean that no one competitor can obtain more than this amount of sub 1 GHz spectrum.
  • An overall spectrum holdings cap of 2×105 MHz, which will mean that no one competitor can obtain more than this amount of spectrum overall.

The Financial Times reports that Ofcom called for the 4G spectrum to be “released as soon as possible,” adding that the auctions were “essential for consumers, the communications market and our wider economy.” The UK regulator, Ofcom, also defended its proposed auction rules, noting it is “ready to defend robustly our final decisions.” The auctions are currently scheduled to begin early next year, but would certainly be delayed if challenged in the courts.

According to the Financial Times, Google and Skype have also waded into the debate, urging regulators to ensure that mobile operators do not stop subscribers accessing their services. Skype has asked Ofcom to ensure that operators with sub-1GHz spectrum provide unrestricted access to its VoIP service.

Posted by Sam Churchill on .

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