The threat of litigation over the 4G auction is damaging to UK consumers and the economy, the CEO of Ofcom said after the regulator published the rules for the forthcoming auction.
The auction is scheduled to take place early next year, with licences likely to be awarded in March and network rollout to follow that summer. The proposals were broadly the same as those mooted in January, with the regulator merely tweaking the portfolios reserved for a fourth national wholesaler. While it has held back spectrum for a challenger to Everything Everywhere, O2 and Vodafone, it has not guaranteed sub-1GHz spectrum, something Three and Everything Everywhere had been campaigning for.
Ofcom CEO Ed Richards (pictured) said it was ‘a racing certainty’ that objections would be raised but he hoped the auction rules would not face a court challenge. He added: ‘It’s impossible for any human being to produce an answer to this that satisfies all parties. Certainly there will be disagreements but we are fully prepared for litigation, fully prepared to defend litigation and are content to do so.’
Richards said the threat of litigation made it harder for regulators to make timely decisions. In an outspoken attack on legal challenges, he said: ‘The general point is everything we do is subject to this huge shadow of litigation and that can mean multiple court cases over multiple years.’ Richards claimed any litigation would nt be in the interests of the UK consumer and economy.
The four operators are currently digesting the proposals outlined in a report spanning more than 1,000 pages. Both O2 and Vodafone cautiously welcomed the report. A Three spokesman said the forthcoming auction would have ‘a lasting effect on the choice of services and value available to mobile consumers’. An Everything Everywhere spokesman described the rules as a ‘crucial step’ to bringing faster mobile speeds to the UK but said some proposals were not in the interests of consumers or competition.
Professional services firm PriceWaterhouseCoopers estimated that the auction could raise as much as £4bn, a fraction of the £22.5bn raised during the 3G auction. Brian Potterill, director of the firm’s telecoms strategy team, said: ‘Most interestingly, Ofcom has retained the proposal to reserve some of the most valuable 800MHz spectrum for the fourth bidder. This could reinforce the scarcity of this spectrum for the three big players, and drive prices much higher than the reserve price. This will be the focus of bidders’ strategies over the coming months.’
Shaun Collins, MD at CCS Insight, said Three was ‘highly likely’ to be the fourth bidder but suggested rivals for the licence could include BT, BSkyB, TalkTalk and Virgin Media. He said: ‘Despite continued operator unrest, Ofcom should be applauded for sticking to its guns. In reality this update provides few surprises, delivering a few tweaks to the process rather than a large scale rethink.’