Yesterday’s proposal by UK regulator Ofcom for revised 4G auction rules have attracted a wide range of responses from operators and other interested parties and observers.
The new proposal included ensuring one of the 800MHz licences up for sale will…
Yesterday’s proposal by UK regulator Ofcom for revised 4G auction rules have attracted a wide range of responses from operators and other interested parties and observers.
The new proposal included ensuring one of the 800MHz licences up for sale will oblige the holder to cover 98% of the UK’s population with 4G, up from a previously planned 95% commitment, or cover so called ‘not spot’ areas with the help of a £150m government injection.
Certain aspects of the previous auction design, including defined minimum and maximum amounts of spectrum each operator was entitled to, have been removed from the new proposal.
Everything Everywhere (EE), the JV owned by Orange and T-Mobile, expressed it was disappointed by the new proposal.
“Ofcom is missing a huge opportunity for the UK to address the imbalance in sub 1GHz spectrum holdings, a spokesperson said.
Vodafone’s response was more positive. A spokesperson said the new proposal would “bring the UK closer to a fair and open auction that will benefit the wider economy, increase competition and ultimately lead to the creation of innovative and exciting new services for consumers.”
But operators also cautioned they would need more time to look into the details of the new proposal. “Ofcom has produced a lengthy document and we need to understand the regulator’s rationale for protecting a fourth operator,” the Vodafone spokesperson said.
Similarly Three, the UK’s smallest operator, said it was still reviewing the proposal. But a spokesperson described it in its first reaction yesterday as a “pragmatic step towards bolstering the prospects of a competitive market for mobile data which would benefit all UK consumers.”
Benoit Reillier, director in KPMG’s economics and regulation practice, pointed out that the new proposal was a “significant departure” from the original rules, saying that as a result “most of the UK mobile operators will be unable to bid for a reserved spectrum portfolio.”
Simon Harris of PwC focussed on revenues the UK government can expect from the auction, which is scheduled to take place in Q4 2012. “A competitive process should still be the outcome,” he said. “Based on other auctions which have taken place, licence fees of £3bn – £4bn could be generated in line with our previous expectations. The desire for sub 1GHz spectrum is likely to be a key driver of competitive tension.”
