O2 and Vodafone have reacted with anger to Ofcom’s consultation on reclaiming some of the spectrum the two operators use for their 2G services, and auctioning it off to competing operators to use for 3G services.
The regulator argues that the industry would benefit more from using the 900MHz spectrum for 3G instead of 2G.
The two operators, however, claim that in the consultation Ofcom has grossly underestimated the cost Vodafone and O2 would incur and overestimated the benefits.
If the operators are forced to give up the spectrum they would have to migrate a large number of 2G customers to their 3G networks. As a result they would need to increase the capacity of the 3G network and upgrade customers’ handsets.
O2 says it would have to build 7,000 new towers, and estimates the total cost to the industry to be £13 billion. The operator says it would have to reduce 3G prices to get customer to move to the faster network. This, O2 says, would force all other operators to decrease their prices and result in a loss of profits for the industry as a whole.
Although all operators are pushing their customers to move to their 3G networks, the time frame Ofcom is suggesting is unrealistic, O2’s spokesman says. The regulator is hoping to auction off the frequency by 2010.
Vodafone, meanwhile, has come up with an alternative proposal, urging the regulator to consider other technologies. ‘We believe that a less interventionist approach is appropriate with operators exploring spectrum trading, leasing, sharing, national roaming or use of substitute technology, such as WiMax,’ Vodafone responded.