Vodafone And O2 Outraged At Everything Everywhere 4G Approval

Vodafone and O2 have hit the roof after Ofcom approved a proposed Everything Everywhere 4G mobile service, which could arrive any time after 11 September, ahead of the much-delayed auction of 4G radio spectrum

Vodafone said it was shocked at the decision, after Ofcom announced it would allow Everything Everywhere, which runs the networks of both T-Mobile and Orange, to use its 1800MHz spectrum to deliver 4G data services – a decision which the regulator had signalled some time earlier.

“We are hugely disappointed with today’s announcement, which will mean the majority of consumers will be excluded from the first wave of digital services. This decision undermines the competitive environment for 4G in the UK,” an O2 spokesperson said.

Ofcom slammed by Vodafone

“The regulator has 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 services before the ground has been laid for a fully competitive 4G market,” read a Vodafone statement, which arrived at TechWeekEurope before Everything Everywhere (EE) could deliver its more complacent response applauding Ofcom’s approval.

The tangled history of mobile spectrum in the UK has left EE with 1800MHz spectrum which was originally issued for 2G mobile networks, but which is suitable for 3G and 4G services. Ofcom allowed 3G services on this spectrum in 2011 and has now approved a controversial application by EE to deliver more advanced 4G (LTE) services, which provide faster data communications.

Other operators will have to wait for the auction of 800MHz and 2.6GHz spectrum which is due to finally take place, after years of wrangling and delays, later this year. Vodafone is outraged that Orange and T-Mobile will get a head start on faster services, suggesting EE may use further legal means to extend that lead by delaying the auction.

“The regulator has spent several years refusing to carry out a fair and open auction,” said the statement. “Now its decision today has granted the two most vociferous complainants during that entire process a massive incentive to further delay it.”

Ofcom defended its decision, arguing that there is a great  benefit to consumers in getting 4G services now and any advantage would be short-lived: “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.”

EE is in the process of selling some of its 1800MHz spectrum, as required by the European Union, following EE’s formation by the merger of T-Mobile and Orange in the UK in 2010.

The expected buyer is Three, and Ofcom has confirmed that the licence to this spectrum would include 4G rights. This – presents the possibility of Three also having 4G services, which has enraged Vodafone further.

“Ofcom’s timing is particularly bizarre given the reports that Everything Everywhere is currently in discussions to sell some of its spectrum to Three,” Vodafone said, before claiming that Ofcom’s auction design has been  “over-engineered” to guarantee Three some 4G-capable spectrum.

A three spokesman has pointed out that the sale of spectrum would have to be cleared, and existing Orange and/or T-Mobile services shut down, so there is no possibility of Three delivering 4G on ex-EE spectrum until at least September 2013.

Referring to a speech yesterday by culture secretary Jeremy Hunt, Vodafone said: “We wholeheartedly support the Secretary of State’s call for the 4G auction to occur in December and look to the regulator to finally do its job and produce a competitive market for 4G services as soon as possible.”

In fact, according to Hunt, Vodafone is one of the operators that has threatened legal action against the auction, of a kind which Hunt criticised: “We have been beset by threats of litigations from mobile operators,” said Hunt, according to Computer Weekly’s report of his speech. “We are doing everything we can, and Ofcom are doing everything they can, to progress as fast as possible, but we do have people who have been quite litigious in the sector.”

Vodafone, however, now says it is fuming, and blames Ofcom: “We firmly believe that a fully competitive market for 4G services is in the best interests of Britain. We have already committed ourselves to reach 98 percent of the UK population with indoor 4G services by 2015 – two years before Ofcom’s own target – but we need to acquire spectrum in the auction to achieve this. Ironically, all that stands in our way right now is the regulator.”

Three said it had concerns about Ofcom’s move, but was far less vociferous than Vodafone. “Liberalisation of 2G spectrum to date has distorted the competitive landscape in the UK, which ultimately harms consumers. Further liberalisation without addressing competition issues could make that distortion worse,” a Three spokesperson said.

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