Spectrum Changes Could Doom 3UK

The head of mobile operator 3 has slammed plans by Ofcom to open up the 2G spectrum for use by 3G services, claiming that the measures could “jeopardise the competitive environment” and even result in the company being sold.

Kevin Russell, chief executive of 3, is calling on Ofcom to take pre-emptive measures to prevent mobile giants O2 and Vodafone gaining the bulk of the spectrum below 1Ghz. He suggests the watchdog should draw up auction rules that cap the amount of spectrum a single operator can hold.

“Healthy competition is critical for UK consumers using mobile services and Ofcom and the government must address the significant competitive distortions they have now created in pushing through the reform of spectrum currently used for 2G mobile services,” said Russell (left). “This can only be done through the structure of the spectrum auction planned for 2012.”

Increasing data capacity

2G spectrum licenses were issued back in the 1990s, with a condition that they could only be used to provide 2G services. Until now, mobile phone operators have therefore been confined to a limited section of spectrum with which to deliver 3G services.

However, the decision by Ofcom means that mobile operators will be able to expand their capacity for 3G services, such as mobile Internet browsing. As the increasing use of smartphones and dongles creates greater demand for 3G data services, those operators with large amounts of spectrum for 3G will be put at a distinct competitive advantage.

Russell highlighted how the merger last year between Orange and T-Mobile in the UK – to create Everything Everywhere – had already reduced competition in the British mobile market, with spectrum consolidation being a key driver in the deal.

“If the Government and Ofcom get this wrong further consolidation could result,” warned Russell. “Ultimately that can only be bad, not good, for UK consumers.”

Tackling the data overload

In July 2010, 3 followed O2 and Vodafone in scrapping its “unlimited data” plans for mobile users. At the time Russell said he regretted using the term “unlimited” to describe data packages, as it was not “the reality of the market place”.

Meanwhile, Ofcom is gearing up for its auction of the 800Mhz and 2.6Ghz high-speed data spectrum next year. Ofcom’s chief executive Ed Richards announced in November that the auction will take place in Q1 2012 and will “fuel an explosion” of 4G networks.

“It is clear that we are talking about a very significant step forward – not only the most significant release since the 3G auction in 2001 but spectrum which is the raw material that will fuel an explosion in next generation mobile broadband,” said Richards.