Everything Everywhere has described the 4G auction rules as a 'crucial step' in bringing faster mobile speeds to the UK, but warned elements of the auction are not in the interests of consumers or competition.
The operator had been campaigning for a guarantee of a chunk of the sub-1GHz spectrum in the auction, which would bring it into line with the spectrum holdings of O2 and Vodafone. A spokesman said: 'We are pleased that Ofcom is moving in the right direction and we recognise that we need to get this process moving now before the UK falls further behind the rest of the world.'
The lack of a sub-1GHz cap is likely to have angered Three, which was also campaigning for a guarantee. A spokesperson for the operator said: 'Ofcom’s decision on the structure of the spectrum auction will have a lasting effect on the choice of services and value available to mobile consumers.'
Each of the operators said it would take time to fully digest the implications of this morning's rules. An O2 spokesman said: 'Ofcom’s detailed rules for the auction represent a significant step towards 4G launch in the UK.' A Vodafone spokesman said: 'Ofcom appears to have created a mechanism to deliver the spectrum needed to run competitive 4G services and we welcome the work it has done.'
The auction for 800MHz and 2.6GHz spectrum will take place next year, with licences issued by the end of March and rollout of services from next summer. Ofcom has reserved some spectrum for a fourth national wholesaler. The rules were broadly in line with the proposals in January, with minor changes to the spectrum held back for a fourth competitor. One operator who wins one of the 800MHz lots of spectrum must provide an indoor 4G reception to 98% of the population by the end of 2017. The same business must provide that service to at least 95% of the population of each of the UK nations.
Brian Potterill, director of PwC's telecoms strategy team, predicted the auction could raise between £3-4bn, a considerably lower figure than the £22.5bn raised by the 3G auction. He claimed reserving a chunk of 800MHz spectrum could drive prices to much higher than the reserve. Potterill said: 'This will be the focus of bidders' strategies over the coming months.'
Thomas Wehmeier, principal analyst for telco strategy at Informa, said that while the UK lagged behind other markets regarding the launch of 4G, consumers and operators will benefit from a more mature technology, greater range of devices and lower equipment costs. However, he was more cautious on Ofcom's decision to bolster a fourth network. He said: 'Ofcom is seeking to engineer the terms of competition by their own design, a huge risk given that in the long-term it remains uncertain whether the long-term profitability and sustainability of the mobile sector and, therefore, consumer interests will be best served by competition between so many different players at the national market level.'
Shaun Collins, MD of CCS Insight, said Ofcom should be applauded for 'sticking to its guns'. He predicted that BSkyB, TalkTalk, Virgin Media and Google could emerge as rivals to Three in bidding to become the fourth operator. Collins said: 'After all the controversy to date, operators must now put their concerns to one side and get on with the auction process to ensure 4G is delivered as fast as is practically possible.'
Matthew Howett, practice leader for regulation and policy at Ovum, said he felt a new entrant to the mobile market was unlikely. He added: 'Given the insatiable appetite for data from consumers in the UK, we can be quite certain that it will be a hotly contested auction with all players keen to ensure they get adequate spectrum to support further growth in demand.'
Editor: Graeme Neill