O2 has accused Ofcom of being ‘wrong on all counts’ after the regulator granted Everything Everywhere provisional permission to liberalise its spectrum for 4G.
In an uncharacteristically outspoken attack, O2 called for the regulator to hold a fresh consultation on Everything Everywhere’s plans, which if approved would enable the operator to launch a limited 4G service by the end of this year. Vodafone also argued that Ofcom’s decision rested on ‘three fundamental errors’.
However, Everything Everywhere said that if it was given the go-ahead by Ofcom to launch 4G services first, ‘any competitive advantage... will not be unmatchable or enduring’. The operator also claimed that both O2 and Vodafone were in a position to refarm their 2G 900MHz spectrum for LTE last year but opted for a 3G service.
O2 went on the offensive in its formal response to Ofcom’s consultation about Everything Everywhere’s spectrum plans, which were published last week. The crux of its argument centred on Ofcom’s contention that the issue of liberalisation had been dealt with when the European Commission put the Orange/T-Mobile merger under scrutiny. O2 said this was ‘wrong’ and accused Ofcom of not paying attention to its own research. It said: ‘In the evidence obtained under [the Freedom of Information Act], Ofcom explicitly states there must be two LTE1800 players on the market at about the same time, not a monopoly. It is unclear to Telefónica why Ofcom has not bothered to review its own contemporaneous documents on the merger before issuing this very important consultation.’
In Vodafone’s response it reiterated its view that giving the green light to Everything Everywhere to refarm spectrum would ‘seriously undermine competition... for many years to come’.
The operator said the regulator did not fully examine whether the decision would distort the market because it did not take into consideration the fact that Everything Everywhere has the largest customer base and number of stores, as well as an HSPA+ 3G service.
In its consultation, Ofcom said Everything Everywhere would have a maximum 15 month advantage over rival networks if it launched its 4G service first. However, Vodafone claimed it would be much longer as competing operators would need time to set up their alternatives from a standing start. Vodafone also argued that Ofcom should not allow Everything Everywhere to liberalise its spectrum until all the operators can deploy a ‘credible’ 4G service. It said Everything Everywhere would still have a competitive advantage in terms of network planning and deployment time.
Everything Everywhere said there were several factors that would prevent it from building an insurmountable lead in 4G, including the lack of relevant handsets available and the fact that ‘the full capabilities of LTE would not be realised for a number of years’. It repeated its argument that allowing it to launch a small scale 4G service would lead to benefits for both citizens and consumers.
Everything Everywhere CEO Olaf Swantee said: ‘Being one of several potential companies able to launch 4G this year does not make us a “monopoly”. This is exactly the type of rhetoric that is designed solely to delay the launch of 4G in the UK.
‘Opposing the launch of 4G in the UK smacks of corporate priorities gone wrong. Such action represents a desire to stifle investment in the UK, while exploiting as much money from existing infrastructure – all of which will ultimately undermine Britain’s drive to build a significant digital economy for the 21st century.’