Ofcom Bans BT-EE From Bidding For 2.3GHz Spectrum To Maintain Competition

EE will be unable to bid for the 2.3GHz spectrum that Ofcom will auction off next year because it has too much already.

The BT-owned operator will be able to bid for a slice of the 150MHz worth of 3.4GHz earmarked for 5G but not any of the 40MHz of the lower band because it is “immediately usable”.

Ofcom says BT-EE already has 45 percent of the available spectrum in the UK and that if the provider won all the 2.3GHz bandwidth up for grabs, this would grow to more than half. Instead, the company’s share will fall to 42 percent.

Read More: What is 5G and why is it different?

Spectrum cap

Rival Three has been campaigning for a cap of 30 percent, arguing BT and Vodafone (which has 28 percent) are “hoarding” spectrum to the detriment of competition. Three has 12 percent and O2 15 percent, according to Ofcom.

Ofcom has stopped short of that, but has acknowledged the need to keep a “balance” of spectrum holdings to maintain competition levels.

“Spectrum is the essential resource that fuels the UK’s economy,” said Ofcom Spectrum Group director. “This auction can help ensure that UK consumers can access the mobile data services they need, and that operators can continue to innovate and build for the future.

“The UK has long benefited from strong mobile competition. We are designing the auction to ensure everyone benefits from a market that continues to innovate and serve them well.”

Unlike the sale of 800MHz and 2.3GHz spectrum in 2013, there will be no coverage obligations. This is because Ofcom sees the new bandwidth as improving capacity not spread.

Competition ambition

There is also no cap on 3.4GHz because these are not “immediately available” and are seen as essential to the early rollout of 5G networks. UK Broadband does have some 3.4GHz assets however, and these are used to power its Relish home broadband service.

Vodafone declined to comment, while O2 had not responded to TechWeekEurope’s request for comment at the time of publication. However, EE did respond.

“While we don’t agree that competition measures should be introduced for this auction, we will now examine Ofcom’s detailed proposal carefully and respond to the consultation,” said EE CEO Marc Allera, in a statement to TechWeekEurope.

Three said it was disappointed Ofcom hadn’t gone further.

“Ofcom exists to promote competition and protect consumers but it has once again shown it is not willing to make the big decisions needed to deliver the best outcome for the UK,” said a spokesperson.

“It has allowed BT and Vodafone to stockpile valuable mobile airwaves and put genuine choice for consumers at risk. It made empty promises to the European Commission that it would tackle this issue but it doesn’t have the courage to do so.

“The mobile industry is failing customers and Ofcom has showed it has no interest in addressing that. A 30 percent cap on total spectrum ownership and a spectrum reservation for smaller operators are the only measures that will preserve competition for the benefit of UK mobile consumers.”

Observers suggest the proposals could result in delays that scuppered the original auction and work against Three and O2 who attempted to merge earlier this year.

What’s next?

“The proposed restraints placed on BT-EE show that Ofcom is concerned that spectrum asymmetry could harm UK mobile competition over the coming years,” commented Kester Mann, an analyst at CCS Insight. “However, they also raise questions as to why the BT-EE merger was waived through with such little fuss, without any apparent need to mandate divestment.

“Today’s announcement represents only a partial victory for Three, which campaigned hard for far more favourable conditions. Like O2, its very future as a standalone mobile operator is hugely reliant on a successful outcome at the auction.

“Any additional hold-up works against Three and O2, which are most in need of new airwaves.

“The auction is crucial to UK providers as it will likely represent the last opportunity to buy mobile spectrum for several years. The next major sale, expected to be the prized 700 MHz band, will not happen before 2020 at the very earliest.”

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