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Dyson hits out at no 30pc cap in upcoming spectrum auction

Alex Yau
July 17, 2017

Three CEO Dave Dyson has hit out at the absence of a 30 per cent spectrum cap in the upcoming auction, claiming it will have a detrimental effect on the UK’s ability to be a 5G ‘world leader.’

On July 11, Ofcom began the first stages of the auction, which it confirmed will happen later this year, where 190MHz of spectrum across 2.3GHz and 3.4GHz bands was put up for bidding.

Whilst not currently in use, the 3.4GHz band is viewed as the major stepping stone towards 5G connectivity. Many have touted it as an enabler of upcoming technologies such as connected cars and IoT.

Two caps on spectrum for the four networks. First is a 255MHz barrier on all immediately usable spectrum, which will prevent BT/EE from bidding on any airwaves in the 2.3GHz option. The second is an additional 340MHz barrier on the overall amount of spectrum any can hold by 2020, equivalent of a 37 per cent cap.

Improving networks 

Three has claimed a 30 per cent cap would benefit UK consumers and competition pricing. O2 has also expressed similar concerns with a 35 per cent cap.

EE currently has a 42 per cent share of immediately usable spectrum, followed by Vodafone (29 per cent), O2 (14 per cent) and Three (15 per cent).

Speaking at an event on mobile spectrum before the auction announcement, Dyson warned: “If we’re serious about being a world leader in digital, the government will need to make it easier to rollout and improve our networks.

“5G will require a much denser network and further reforms are needed. Consumers are demanding data at an exponential growth rate, but there will be barriers to supplying this. The average usage could rise to over 50GB per customer per month by 2025.

“We still believe the 30 per cent cap is the right measure if a four player competitive market is the most important outcome you want to achieve. No cap will create a detrimental effect on 5G and network investment.

There is currently no competition measure proposing any of the consultations that have previously been put forward, so in theory any one operator could take all of the 5G spectrum.

“The UK market is pretty mediocre. We need to be much better than mediocre otherwise we will struggle to compete against a global market. Wouldn’t it be great in five years time if other countries looked at the UK as an example of what next generation connectivity could deliver?”

O2 CEO Mark Evans added the announcement from Ofcom “falls short of our expectations”.

No special treatment 

However, a Vodafone spokesperson said: “All mobile companies have had and will have ample opportunity to bid to their own economic value for spectrum, and we do not see any need for special treatment of any operator.

“It would be sensible for Ofcom to adopt a safeguard cap on spectrum in the 3.4GHz band to ensure that no single operator can monopolise the launch of 5G services.”

Ofcom group director of spectrum Philip Marnick defended the regulator’s decision, claiming it is the best option for a four-player market.

“We take all our decisions in the interests of consumers. This auction will keep the airwaves fair by reducing the share held by the largest operator.

“It will include strong safeguards to maintain a healthy four-player market and allow mobile operators to acquire the airwaves they need to compete.”

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