- Ofcom’s decision is really rather startling – if not completely unexpected. Although Ofcom gave an initial informal knee- jerk head-nod to the proposal [to permit EE to use its 1800MHz spectrum for LTE] when it was first raised, it postponed making a decision at that time due to the overwhelming objection to the plan by Everything Everywhere’s competitors.
- However, the inertia in actually getting to the 800MHz/2600MHz auction (because of the challenge of getting the rules right, dealing with potential interference mitigation issues, and keeping five mobile operators happy) seemed to be making Ofcom impatient and its initial receptiveness to the Everything Everywhere proposal seemed to betrayed that impatient attitude. This was borne out in today’s decision.
- This decision gives Everything Everywhere a first mover advantage of at least three months on its rivals Vodafone, O2, and Three.
- While refarming of spectrum (the granting of approval to allow the use of an alternate transmission or modulation standard within a particular band – i.e. allowing 2G spectrum to be used for 4G) is of course a sensible endeavour (it engenders both technological efficiency and socio-economic benefits), Ofcom could have been more judicious and allowed refarming after the auction. This would have allowed all operators to deploy LTE (4G) on a level playing field.
- The unexpectedness of this decision is compounded in light of the litigious cloud that has been hanging over UK spectrum policy making since LTE first came onto the agenda.
- It is possible that some of Everything Everywhere’s rivals might launch a legal challenge against the decision. Vodafone in particular has adopted a very rueful, if not adversarial tone. Its press release, which uses the phrases ‘bizarre’, ‘careless disregard’, ‘refusal to properly regard the competitive distortion’ ends with the lament ‘all that stands in our way right now is the regulator’. However the operators are expecting the auction to perhaps take place in December 2012/Q1-2013 so it may not be worthwhile to pursue legal action.
- While there is no hard set date for the auction, any litigation could potentially push the auction back further than three or four months. This could have the effect of lengthening Everything Everywhere’s first mover advantage (which begins in exactly three weeks) and its ability to capitalise on market share.
Very useful that, thank you Morgan!