Three May Sue Ofcom For Letting Everything Everywhere Launch 4G

Dave Dyson, CEO of Three UK, has said the 4G spectrum auction process “puts competition at risk”, by giving Everything Everywhere  a head start – but EE has argued Ofcom’s decision is only fair.

Dyson refused to rule out legal action over Everything Everywhere’s application to use its existing 3G spectrum to roll out 4G Long Term Evolution (LTE) services, but said that Three would wait for Ofcom’s response before considering its next move.

Competitive disadvantage

Everything Everywhere (EE) was granted provisional approval by Ofcom to launch a 4G network using existing spectrum earlier this month, with Vodafone and O2 joining Three in voicing their concerns that a rival would be allowed to offer such services ahead of the perpetually delayed auction of spectrum, which is now not expected to take place until later this year.

Speaking at the Westminster eForum, Dyson was adamant that just because Everything Everywhere, formed by a merger between Orange and T-Mobile, had excess spectrum, it shouldn’t be allowed to use it before other networks were able to set up 4G networks. He claimed that any EE 4G service would only appeal to a niche market, but would be a valuable marketing tool for EE, the UK network which has the most subscribers.

Dyson said it was “interesting” that Vodafone appeared to be disgruntled by the decision, despite the fact that it had “gladly” accepted liberalisation of the 2G network – allowing Vodafone to offer 3G without paying any further premiums. He did concede “at least we’re not the lone voice.”

Distorted market

The liberation of 2G spectrum had caused a “distortion of the competitive landscape” and operators which have access to the highly-coveted low frequencies, such as the 900 MHz spectrum, held an unfair advantage, said Dyson.

O2 and Vodafone own such spectrum, valued by operators because it can travel further and deeper into buildings. While other countries have reallocated spectrum to restore the balance amongst their operators, the UK has not done so, with Ofcom claiming that the technical advantages of these frequencies are not clear.

“My clear request to Ofcom is to reconsider their analysis on low frequency spectrum,” said Dyson, adding that a conclusion to the contrary would be irrational and put competition at risk.

Everything Everywhere advisor Kip Meek said that it would be unfair of Ofcom to prevent EE offering 4G services, since the operator was already required to dispose of one quarter of its 1800 MHz spectrum to receive EC approval – spectrum which Dyson admitted Three was interested in.

It would be “inappropriate” for a regulator to engineer the market in such a way, said Meek, and “inappropriate to deny consumers the benefits of 1800MHz LTE when we’re already behind Europe and the rest of the world.”

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