O2 Legal Challenge Could Delay 5G Spectrum Auction

Ofcom has confirmed it faces a legal challenge to a planned 5G spectrum auction by operator O2, potentially creating a significant delay to the UK’s rollout of 5G services.

O2 raised last-minute concerns with Ofcom last week as part of a consultation process, the regulator said.

The company’s complaint relates to a technical point in the way the auction is to be organised, the Financial Times reported, citing unnamed sources familiar with the matter.

A judicial review could reportedly delay the auction of 5G-capable spectrum by up to 18 months.

‘Disappointed’

Ofcom said it was “disappointed” O2 had decided to issue its challenge.

“People and businesses need fast, reliable mobile services more than ever, so we want to auction these airwaves as soon as possible,” Ofcom said in a statement.

“We’re really disappointed that one operator has threatened to launch a legal dispute that could slow things down for mobile users and the economy.”

Companies had until last week to notify Ofcom of whether they intended to raise concerns that had not been resolved by previous consultations, and O2 did so.

The company reportedly said it wants blocks of spectrum to be contiguous, rather than being sold in fragmented slices.

Following the auction operators can trade spectrum in order to harmonise it into contiguous blocks, but the process adds complexity and risk.

Legal challenge

Ofcom has issued a short consultation period related to one aspect of the auction, but it is as yet unclear whether this could address O2’s concerns.  O2 declined to comment.

Challenges to spectrum auctions are common, with O2’s move following a separate challenge by Vodafone last month.

Vodafone had asked culture secretary Oliver Dowden to expedite the process of handing over 5G spectrum to operators in order to help companies meet increased demand due caused by the coronavirus pandemic.

The auction process remains on hold due to the pandemic, and Ofcom has not as yet issued a firm date for when it is to take place.

Ofcom is looking to sell 200 MHz of spectrum in the 700 MHz and 3.6-3.8 GHz bands.

The regulator previously auctioned 5G spectrum in 2018.

Merger plans

O2’s owner Spanish firm Telefonica, recently confirmed it is in talks with Virgin Media owner Liberty Global about merging O2 and Virgin.

A previous proposal to sell O2 to Three owner CK Hutchison was blocked by the European Commission over concerns it would reduce the UK’s number of mobile operators to only three.

Virgin Media’s business is focused on cable, however, while O2’s business is primarily mobile, meaning the deal may not face such challenges.

The merger would create a one of the country’s largest entertainment and telecoms firms and would be a major rival to BT, which owns second-largest mobile network EE.