Not a day goes by it seems without another country or operator announcing the roll out of LTE services. The US is leading the way, but LTE is also being rolled out in Australia, Germany and the United Arab Emirates, to name but a few. LTE auctions have been completed in France, Belgium, Italy, Poland and Portugal, to name a few more.
And yet the UK 4G spectrum auction has been repeatedly pushed back as operators disagree with the processes proposed by UK regulator Ofcom for how it will be run, even threatening legal action. The constant opposition from operators has become a real issue.
Speaking at the European Competitive Telecommunication Association (ECTA) regulatory conference last week,Ofcom chief executive Ed Richards said that preparing for the auction – now pencilled in for the second half of 2012 – is one of Ofcom’s “most important tasks at present”. However, it still won’t be until early 2013 that the first LTE services are launched, more than two years behind the US.
The most recent delay in the auction came in October when Ofcom announced it had decided to run a second consultation period “due to the significance of the decisions that we need to take.” The regulator said a statement regarding the consultation will be published in summer 2012.
However, Richards has now expressed his disappointment with the way in which the UK operators “have chosen to entangle this process in litigation or threats of litigation”. Although he stressed that Ofcom recognises the need for companies to defend their commercial interests and that a right of appeal is essential if a regulator makes a decision that is “either procedurally or substantively flawed,” Richards clearly believes the system has allowed operators to wield too much influence.
“When litigation becomes essentially strategic rather than based on objective grounds, and when it has the effect of holding back innovation and hampering growth, it is legitimate to ask whether the overall legislative framework fully supports the public interest in this increasingly vital area,” he said.
It's worth noting that the UK’s three biggest operators – Everything Everywhere, O2 and Vodafone – aren’t in a desperate need to move to LTE as they have spare 3G spectrum capacity, following Ofcom’s decision in early 2011 to allow them to refarm spectrum they already hold to support advanced mobile services.
And although the prices for 4G/LTE spectrum are unlikely to reach the heights of the much-hyped 3G auction in 2000, operators won’t want to invest significant amounts of money in new spectrum until it’s absolutely necessary.
Obviously, operators want to make sure the allocation is fair, but it’s got to the point where their reticence regarding the 4G auction is causing the UK to slip behind other parts of the world in the development of mobile communications.
David Dyson, the chief executive of Three UK – which didn’t get additional 3G capacity earlier this year – appealed to the government to ensure that the 4G auction isn’t delayed by legal action from other operators. In an interview with the Financial Times, Dyson said the auction plans should be passed as legislation, limiting the success of any legal action from operators to oppose them.
“It is up to Ofcom and the government to take a strong lead to make sure that any potential disruption to the auction is dealt with effectively because O2, Vodafone and Everything Everywhere are all incentivised differently to defer that auction for as long as possible,” Dyson said.
And Ofcom’s Richards appears to have come to a similar viewpoint. “I am sure legislators would be all too willing to accept an argument which returns power in such matters to politicians, in light of the apparent inability of the current model to make timely decisions where the national interest is at stake,” he said.
“I think some major companies will have to reflect upon whether they have inadvertently jeopardised the benefits of objective, independent regulation in this area by virtue of their willingness to game the system,” he added.
Attempts by UK operators to delay the 4G spectrum auction are not helping the UK mobile industry and economy. But it's not too late. Maybe it’s time for the operators to accept that the UK needs to keep pace with Europe and the US, and stop trying to make UK mobile infrastructure evolve at the speed they want.
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