Three could face network capacity problems in urban areas by the end of 2012 unless more spectrum becomes available, Three CEO David Dyson warned today.
The upcoming 4G auction for 800MHz and 2.6GHz spectrum is crucial to Three’s growth plans. Three has the smallest amount of spectrum among the four operators, so it badly needs more spectrum to fulfil its ambitious growth plans. Dyson is therefore keen that the auction is not delayed.
However, he said that the other networks have a vested interested in delaying the auction, as they will have to start paying a license fee (which could be as much as £300m per annum) for the 2G spectrum they have refarmed to 3G once the auction is over.
Three has no 2G spectrum to refarm. Unlike other European countries, the UK regulator Ofcom did not force existing operators to give up some 2G spectrum when new entrants come to market. Three has always maintained that this means the UK does not have a level playing field. Dyson believes Ofcom’s move in liberalising the use of 2G spectrum has further distorted the market to Three’s disadvantage.
‘We carry nearly 50% of the UK’s mobile data traffic and yet we have the smallest amount of spectrum,’ said Dyson. ‘One way the other networks have of slowing us down is to delay the auction, so that we hit congestion problems, which might force us to lower the value of our proposition.’
Dyson said that when Ofcom allowed the other networks to refarm their 2G spectrum earlier this year, it did say that the imbalance would be rectified at the 4G auction. Ofcom’s consultation paper on the 4G auction did suggest that caps would be placed on the amount of spectrum operators would be allowed to win. Three’s larger rivals are unhappy with the caps proposal and have threatened legal action, which could delay the auction.
Editor: James Atkinson