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Telecoms firms send Ofcom letter asking for 30pc spectrum cap

Paul Withers
October 4, 2016

Three, TalkTalk, CityFibre, Relish and Federation of Communication Services call regulator’s CEO to correct what it claims is an imbalance of the mobile airwaves 

Five major telecoms companies have sent a letter to Ofcom to call for it to apply a 30 per cent spectrum cap on mobile operator following the next auction.

It echoes comments made by Three UK CEO Dave Dyson (pictured) last month, in which he launched a scathing attack on the regulator claiming its current rules on bidding for spectrum is wrecking competition in the UK market. 

The document, sent to Ofcom CEO Sharon White, has been signed by several CEO’s from leading players: Dyson, TalkTalk’s Dido Harding, CityFibre’s Greg Mesch, Relish’s Nicholas James and Chris Pateman from the Federation of Communication Services.

Next year a tranche of 1900MHz of spectrum is being auctioned but the letter claims the UK suffers from the largest imbalance in spectrum distribution across mobile operators of any developed country. BT/EE owns 42 per cent and Vodafone 29 per cent, Three and O2 owning just 15 per cent and 14 per cent respectively.

‘You can fix this’

The letter states: “This imbalance has developed as a consequence of Ofcom’s failure to put protections in place that ensure all networks have access to sufficient amounts of spectrum to deliver both a great mobile service and competitive prices.

“Ofcom has acknowledged the role that four networks with sufficient access to spectrum played in mobile prices falling by two thirds between 2003 and 2013. However, the growing imbalance in spectrum distribution has more recently led to a rise in prices for mobile users.

“Ofcom also recognises that there is a worrying inequality across the UK for consumers to access latest technologies as well as to the full choice of all four mobile operators.

“Failure to tackle the imbalance will see consumers suffer the misery of higher prices for a poorer service at a time when mobile’s importance to the digital economy has never been greater.

“You can fix this. The next auction of spectrum could be your last opportunity to give UK mobile customers a highly competitive mobile market which gives them the speeds, coverage and performance they deserve and demand.”

The letter requests Ofcom to apply a cap of 30 per cent on the total amount of spectrum any one company can own following the auction.

It claims it will deliver:

  • Real and sustainable choice of networks for consumers and businesses;
  • Better network coverage and faster download speeds for all customers;
  • A mobile industry that ensures that the UK is at the forefront of new technologies like 5G and the associated economic benefits;
  • More choice for consumers through a healthier wholesale sector.

The companies add that the cap has no negative consequences as this would allow a competitive bidding process among the operators and new entrants, thus providing a fair return.

Stockpiling spectrum

“By protecting effective competition and supporting a market with genuine choice, a 30 per cent cap would also deliver significant long-term economic benefits for the UK well beyond the short-term sales proceeds of the auction.

“Most of all, it will ensure that UK consumers see real benefit from this vital national resource. BT and Vodafone already sit on large amounts of unused mobile spectrum, currently supported by mobile handsets. This denies customers of other networks access to increased speeds and better customer experience. The failure to implement the cap will mean that both BT and Vodafone have the opportunity to stockpile even more airwaves and increase their dominance with competition and consumers suffering as a result.

“Even if such an outcome is considered unlikely, unless it can be completely eliminated as a potential scenario, it would be reckless to avoid making an intervention that has no downside for UK consumers.

“Ofcom must therefore act to implement a cap of 30% to fulfil its duty to protect consumers and allow competition to thrive.”

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