O2 UK asserted that some of the conditions of the proposed UK 4G spectrum auction are “a state aid and therefore illegal under EU law,” which would enable bidders other than Vodafone UK and O2 to potentially acquire spectrum at discounted prices. While the operator said it supports the use of a “combinatorial clock auction,” which will prevent bidders from acquiring spectrum to stop someone else getting it, and spectrum caps, to prevent a single bidder achieving a dominant position, it is critical of a proposed spectrum floor. It said that regulator Ofcom “is faced with a difficult choice of either revisiting its spectrum floors proposal or discarding the floors and getting on with the process.”
O2 and Vodafone already hold sub-1GHz spectrum, which can be used to deliver mobile broadband services – O2 is already “refarming” some of its allocation to support 3G services, having previously used this for its 2G (GSM) network. Rivals Everything Everywhere and 3 UK do not have similar allocations. In a statement, O2 said that the proposed floors are “based on the mistaken belief that 800MHz and 900MHz are directly comparable. They are not.” In the planned auction, Ofcom is offering 800MHz frequencies, with O2 and Vodafone already having 900MHz licenses. Everything Everywhere had previously threatened legal action over the planned auction process, due to the potential for an imbalance in the spectrum holdings of the various operators at the end.