7/9/2010 10:13:00 AM
Spectrum auction to get green light
The £5bn spectrum auction is set to get the green light this summer, as the Government looks to raise revenue from the mobile industry in light of the UK’s £90bn deficit.
Communications minister Ed Vaizey is currently examining plans for the sale, which were held up by the election, Mobile can reveal. The Government is hoping to push through the ‘statutory instrument’ for spectrum by its summer recess on 29 July.
The spectrum reallocation – which includes the auction of 800MHz spectrum – is part of the Digital Britain initiative and central to the rollout of LTE services in the UK. If the coalition Government approves the plans, the auction could go ahead next year.
However, threats of legal action from O2 and Vodafone could push it back until 2012. The networks argue that the auction will create a ‘two player market’, making the UK telecoms space uncompetitive.
The dispute could send plans for spectrum reallocation back to the drawing board, and could see Labour appointed Spectrum Broker Kip Meek’s recommendations scrapped.
A spokeswoman at the Department of Business, Innovation and Skills confirmed that ‘ministers are looking at the plans’ and added that ‘a number of options’ were being considered.
O2 and Vodafone’s concern centres on the 15MHz of 1800 bandwidth spectrum divested by Orange and T-Mobile as part of their merger agreement. This will be auctioned off as one block.
Vodafone and O2 argue its size will skew the market, giving the winning bidder an unfair advantage and creating a two player market. Both operators want the removal of caps on spectrum holdings below 1GHz to allow a more even divide of spectrum among bidders.
One operator source said: ‘We will sue the Government if this goes ahead. Under the current plans the winning bidder and the newly merged Orange/T-Mobile joint venture will get the lion’s share of spectrum, creating a two player market. This will create a very uncompetitive market which is not in the interest of consumers.’
An O2 spokeswoman said: ‘Decisions on spectrum by the Government and the regulator in the coming weeks will have implications for the long-term dynamics of our industry. It’s crucial we reach an outcome that promotes both competition and innovation.’