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Ofcom tweaks LTE auction plan to guarantee four MNOs

13 января 2012

U.K. regulator Ofcom on Thursday revised its proposals for the LTE auction due to take place later this year, scrapping plans to reserve sub-1 GHz spectrum for Everything Everywhere, and increasing network coverage targets.

Launching its second consultation on the auction, the watchdog said it was concerned there would not be adequate competition should there not be at least four mobile network operators, and therefore proposed reserving spectrum for a fourth player.

"We consider that there is a material risk that there will be fewer than four credible national wholesalers of mobile services in future if neither Hutchison 3G UK (H3G) nor a new entrant were to acquire at least a minimum amount of spectrum in the auction," the regulator stated.

"Given the nature and extent of their current spectrum holdings, we do not have the same level of concern in regard to Everything Everywhere, Telefonica UK Limited (Telefonica) or Vodafone," it added.

One analyst said this indicates Ofcom is favouring 3UK in the auction.

"It's clear that Ofcom continues to value 3's disruptive nature and wants to in effect guarantee its existence post-auction," said Ovum analyst Matthew Howett.

Ofcom has also scrapped plans to reserve a chunk of sub-1 GHz spectrum for Everything Everywhere. The joint venture between Orange and T-Mobile's U.K. operations had lobbied Ofcom for some lower-frequency spectrum so it could augment its 1800 MHz spectrum with airwaves able to travel further and penetrate buildings more easily. Vodafone and O2 already currently hold sub-1 GHz spectrum.

Needless to say, Everything Everywhere did not respond favourably to Ofcom's new proposals.

"Everything Everywhere is very disappointed to see that Ofcom has again reversed its proposal to ensure all mobile operators hold a minimum amount of sub-1 GHz spectrum," an Everything Everywhere spokeswoman told Total Telecom.

"Ofcom is missing a huge opportunity for the U.K. to address the imbalance in sub-1 GHz spectrum holdings, which has damaged consumer interests for the last 20 years – and is a situation which is now threatening to continue," she added.

Ofcom explained in its consultation that Everything Everywhere should be capable of delivering LTE services by refarming its current spectrum, and therefore it isn't essential for it to acquire sub-1 GHz spectrum.
However, Everything Everywhere berated Ofcom's decision.

"The importance of sub-1 GHz spectrum, which delivers service and cost benefits, has been recognised by other regulators across Europe and supported by economic analysis," the spokeswoman said. "All of the regulators bar Ofcom have made vigorous efforts to support healthy and sustainable competition by ensuring that the imbalance of sub-1 GHz holdings is redressed."

Meanwhile, a Vodafone spokesperson welcomed the proposals and the competition they could bring, but warned it would not understand Ofcom's rationale for protecting a fourth operator until it has read the documentation.

O2 also claimed to be satisfied with the proposals, but took the opportunity to remind Ofcom what the focus of the auction should be.

"The key objective of the 4G auction should be to ensure that operators are able to exploit the full potential of the spectrum, in order to deliver true connectivity for the benefit of consumers, business and UK plc," a spokesman told Total Telecom.

The consultation also detailed plans to obligate the winner of one 800-MHz licence to cover at least 98% of the population by the end of 2017, up from the 95% target proposed in its first consultation in March 2011.

"This additional 3% is important, as it is to these households that it is proving particularly difficult and expensive to reach with the super fast broadband that is now widely being deployed in cities," explained Brian Potterill, a director at PwC's telecoms strategy division.

Ofcom suggested that the 800 MHz licensee subject to the coverage obligation should be required to replicate coverage currently provided by 2G services.

"The set of proposals now on the table appear to leave everyone with something to be optimistic about, but at the same time requires compromises to be made," concluded Ovum's Howett. "Perhaps Ofcom have got it right?"

The auction has been under close scrutiny ever since it was postponed by Ofcom in October 2011 to allow time to launch Thursday's second consultation. Despite the delays the regulator has repeatedly insisted its auction plan is on schedule.

Источник: Total Telecom

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