Rival mobile operators up in arms over 'unjustifiable head start to the largest player'
Ofcom's consultation on Everything Everywhere's application to vary its 1800 MHz spectrum licences to allow the use of LTE and WiMAX technologies closed on 8 May 2012. In response to the consultation, both Vodafone and Telefonica have voiced major concerns over the fairness of Ofcom's proposition, which will give the UK's largest mobile operator a head start over its two main rivals.
Vodafone stated in its response to the proposition that it 'strongly believes that a competitive market in 4G services will bring long lasting benefits to UK consumers.' However, it added that having launched these services in a number of other countries it would urge Ofcom to hold a full and fair spectrum auction as soon as possible so that all operators can access the necessary spectrum for 4G. 'Instead, Ofcom's current consultation proposes to give an unjustifiable head start to the largest player which could seriously undermine competition in the UK market for many years to come,' it said.
Continuing, Vodafone commented in its response to Ofcom: 'Instead of liberalising for Everything Everywhere alone, without any preconditions, Vodafone believes Ofcom should take any remaining measures now to ensure that licences in the 1800MHz band are capable of being used for 4G but not vary existing 1800MHz licences until it is satisfied that there are four operators holding sufficient cleared spectrum to deploy credible national 4G networks. This is consistent with Ofcom's stated policy objective in both of its most recent spectrum consultations and would, in practice, require the release of new spectrum via the Combined Auction before any 1800MHz licences are varied.
'…Vodafone has previously argued that Ofcom's task is not to impose strict egalitarianism between all operators, but that Ofcom must guard against market bifurcation in which Everything Everywhere alone has an entrenched advantage that is damaging to competition and the interests of consumers…Ofcom's current proposal to liberalise LTE for EE unconditionally is hard to reconcile with the importance Ofcom has attached in its auction consultation on the need to maintain four national wholesalers.'
Telfonica said in its response: 'The consequence of granting immediate liberalisation would be the creation of a monopoly provider of 4G national wholesale services for a period of at least 18 months and very likely substantially longer. This is an extraordinary step for a National Regulatory Authority to take, given its duty to promote competition and its stated policy of intervening ex ante to secure a four player 4G national wholesale market. Any such proposal must raise prima facie competition concerns.'
It added that 'Ofcom is wrong on all counts'.
In its own comments on the proposal, Everything Everywhere stuck to its guns: 'In any event, Ofcom correctly concludes that there is no material risk of a distortion of competition as a result of Everything Everywhere's LTE launch. This is consistent with the view taken by the European Commission in its assessment of the T-Mobile / Orange merger that any competition concerns associated with Everything Everywhere being the only operator with a clear path to launching full coverage LTE at the best possible speeds ahead of the spectrum auction were addressed, in their entirety, by the commitments given by France Telecom and Deutsche Telekom, including in particular the commitment to divest 2×15 MHz of 1800 MHz spectrum. Given the limited and temporary nature of any possible competitive advantage Everything Everywhere considers that it would be wholly inappropriate, and unnecessary, for Ofcom to intervene by imposing any regulatory measures.'
Previously, Ofcom stated that allowing Everything Everywhere to reuse its spectrum for LTE and WiMAX is likely to bring material benefits to consumers, including faster mobile broadband speeds and, depending on how Everything Everywhere uses the spectrum, potentially wider mobile broadband coverage in rural areas.
In response to concerns raised in the consultation, Ofcom commented: 'The consultation responses raise a number of detailed issues that Ofcom must now consider carefully. We will publish a statement on the proposed variation as early as possible.'
