Operators Can Trade Spectrum – But Are Not Happy

Ofcom has given mobile phone operators the ability to trade valuable spectrum in an effort to increase network capacity and deliver faster mobile broadband.

But some are not happy and believe the move will not benefit the UK taxpayer.

Back in February Ofcom first revealed its proposals to allow mobile phone operators to trade the radio spectrum that mobile phones use to communicate with mobile masts. The idea is that is operators with a greater need for spectrum will be able to make offers for spectrum from those who need it less.

Spectrum Demand

This, Ofcom believes, will introduce an element of flexibility in spectrum usage and will help operators to respond more quickly to demand. With 80 million mobiles in the UK, 12.8 million of which are smartphones, the demand both on mobile networks and therefore mobile spectrum is at a premium.

Ofcom’s new spectrum trading regulations covers spectrum at 900 MHz, 1800 MHz and 2100 MHz.

“Over the past two decades, mobile phone companies in the UK have acquired licences for blocks of spectrum,” said Ofcom. “In general, the more spectrum an operator holds, the more telephone conversations and internet traffic it can carry over its network. Not all operators hold the same amount of spectrum, and the level of demand for mobile services also differs from area to area.”

By allowing operators to trade their spectrum, Ofcom believes that there will be greater opportunity to use it more efficiently.

Ofcom will be responsible for the administration of spectrum trades – publishing the details of proposed trades online, confirming that they are acceptable, and then issuing revised licences to implement the trades.

No Trading Likely

“The trading of different frequencies of spectrum has been envisaged since 2003, and today’s announcement is simply giving the green light to commence trading of 900,1800 and 2.1MHz spectrum,” an Everything Everywhere spokesperson told eWEEK Europe UK via email.

“The free market for spectrum is positive for the industry, as the ability to trade leads to efficient allocation of resources and therefore in due course has consumer benefits – but in reality trading has been slow to take off and we therefore we do not expect a flurry of activity anytime soon,” it added.

But others are less happy, most notably 3UK, which has also previously complained about the upcoming 4G spectrum auctions.

900MHz Concern

The problem stems from the fact the valuable 900MHz spectrum mostly belongs to Vodafone and O2 (formerly BT Cellnet), as they were the only mobile operators in business when the spectrum was assigned.

“Spectrum is the lifeblood of smartphones and the mobile internet and for those with surplus holdings it is also a strategic asset, so voluntary trading is the exception,” a 3UK spokesman told eWEEK Europe UK. “This move simply allows those who have been gifted access to public spectrum to profit from it, with no benefit for UK taxpayers.”

“Ofcom’s ambition to deliver faster and more capable services to consumers is best served by a truly competitive allocation of this public asset,” it added.

These points were reportedly highlighted at a meeting with the department of Culture, Media and Sport select committee on mobile spectrum on Monday.

Commons Hearing

The committee heard the views of John Cresswell, CEO of Arqiva, Kevin Russell, Chief Executive Officer of 3UK, and Richard Moat, Deputy CEO of Everything Everywhere.

During this meeting, Russell reportedly pointed out that when Orange and T-Mobile (Everything Everywhere) sell spectrum, the French and German government will benefit from spectrum  given them  for free by the British government 20 years ago.

Of course it is worth pointing out here that 3UK is also owned by a foreign owner, namely Hutchison Whampoa, a Hong Kong-based ports conglomerate. Indeed, the only British owned mobile operator left in the UK is Vodafone. O2 is currently owned by Spanish telecoms giant Telefonica, and Everything Everywhere is a joint venture between Deutsche Telekom and France Télécom.

Meanwhile during the commons meeting it also emerged that Everything Everywhere and 3UK felt they are at a severe disadvantage because of liberalisation of 900MHz. What 3UK is asking for is at least 2×10 of the new spectrum to compete.

And finally 3UK and Everything Everywhere both apparently agreed that Vodafone and O2 should pay more rent in the form of AIP. This is because they have 900MHz effectively free of charge, and can therefore roll it out in 3G usage (by re-using 2G spectrum for 3G services).