Ofcom Warns Operators Over Delayed 4G Auction

The head of Ofcom has expressed his deep disappointment over the conduct of Britain’s mobile operators, that sought to delay the 4G spectrum auction in the UK via legal means.

And Ofcom’s chief executive Ed Richards went one step further, and warned the operators that if they do not cease their legal manoeuvrings, the government could seize back regulatory powers and impose its own spectrum allocation.

Ofcom Warning

The blunt warning was delivered by Richards in a speech on Tuesday to the European Competitive Telecommunication Association (Ecta) regulatory conference. During the speech, Richards pointed to the problems the UK has experienced in auctioning off the 800MHz and 2.6GHz spectrum, which is to be allocated for the provision of 4G services.

“It has been very disappointing to witness the extent to which the incumbent mobile operators have chosen to entangle this process in litigation or threats of litigation,” said Richards.

“We recognise, of course, the need for companies to defend their commercial interests and to have recourse to the law in order to do so,” he said. “If a regulator or any other public authority makes a decision that is either procedurally or substantively flawed, the right of appeal is there to ensure good decisions replace bad ones.”

However Richards made clear that he and Ofcom feels that some operators are undertaking legal action as each operator seeks to “game the system” to ensure it has the best possible outcome.

“But when litigation becomes essentially strategic rather than based on objective grounds, and when it has the effect of holding back innovation and hampering growth, it is legitimate to ask whether the overall legislative framework fully supports the public interest in this increasingly vital area,” said Richards.

He pointed to the UK parliament’s Culture, Media and Sport committee, which last month slammed the stance of the operators and heavily criticised them for further delaying the already much-delayed 4G spectrum auction.

This came after the Culture Secretary Jeremy Hunt pleaded with operators in September to avoid delaying the auction process any further.

Gaming The System

Richards said these legal arguments was making it increasingly hard for important decisions to be made and implemented. And he warned that Government patience was wearing very thin indeed.

“This may well be a consideration as British lawmakers consider their approach to a promised new communications bill for the UK,” he said. “I think some major companies will have to reflect upon whether they have inadvertently jeopardised the benefits of objective, independent regulation in this area by virtue of their willingness to game the system.”

“I am sure legislators would be all too willing to accept an argument which returns power in such matters to politicians, in light of the apparent inability of the current model to make timely decisions where the national interest is at stake,” he warned.

Richards said that it was still Ofcom’s intention to auction off the 4G spectrum in the second half of next year, with spectrum available for LTE services to be launched in parts of the UK as early as January 2013.

Operator Complaints

All of the UK’s mobile operators have vigorously and fiercely complained about the 4G auction, with Vodafone and O2 reportedly threatened legal action at one stage.

O2 complained that guaranteeing spectrum to Everything Everywhere (T-Mobile and Orange) and 3UK equates to “illegal state aid”, whilst 3UK described the plan as a “boot on its head” that could force it to wind up its operations.

These complaints led Ofcom in October to officially delay its auction of 800MHz and 2.6GHz spectrum. The postponement came after Ofcom denied in early September that its 4G auction would be delayed.

But it is worth remembering that the 4G auction in the UK has already been delayed for four years by legal challenges.

This is despite the financial consequences of failing to improve mobile networks. In October a survey from the policy advisory group Open Digital warned that the delay in rolling out 4G will cost British businesses £730 million a year.

And there is no doubt that the UK is falling behind other European nations regarding 4G. Indeed, the plan to only start deploying 4G networks in 2013 will be four years behind the world’s first LTE deployments in Oslo and Stockolm and three years behind the first commercial service in the United States.

Meanwhile the EU has told member states to get the 800MHz band cleared for mobile broadband by the end of 2012, stating that they must deliver 4G mobile broadband by 2013.