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Ofcom pops 37% spectrum cap on mobile providers' domes

Decision ahead of auction falls short of calls by Three

Telecoms regulator Ofcom has capped the maximum amount of mobile spectrum a company can own at 37 per cent, ahead of its auction of mobile spectrum later this year.

Later this year the regulator will flog licences to use 190 MHz of spectrum in two frequency bands, increasing the airwaves available for mobile devices by almost one third.

Ofcom will also auction off its 40 MHz of spectrum in the 2.3GHz band; and the 150 MHz of spectrum to be auctioned in the 3.4GHz band, identified as central to the rollout of 5G.

This cap means BT/EE will not be able to bid for spectrum in the 2.3GHz band.

However, those plans fall short of the 30 per cent cap on spectrum ownership which mobile operator Three had previously called for.

BT/EE currently holds 42 per cent of immediately usable UK mobile spectrum. By contrast, Vodafone holds 29 per cent; O2 has 14 per cent; and Three holds 15 per cent.

Responding to the plans, Three’s chief executive Dave Dyson said Ofcom’s rules were a “kick in the teeth for consumers”.

He said: “By making decisions that increase the dominance of the largest operators, Ofcom is damaging competition, restricting choice and pushing prices up for the very consumers that it is meant to protect.

“The mobile market is imbalanced and failing customers. Ofcom has shown little interest in tackling the problem. We will consider our response as a matter of urgency.”

But Ofcom had said Three presented an "overly pessimistic view of its position" during the consultation process.

An Ofcom spokesman said: "We take all our decisions in the interests of consumers. This auction will keep the airwaves fair by reducing the share held by the largest operator. It will include strong safeguards to maintain a healthy four-player market and allow mobile operators to acquire the airwaves they need to compete.”

Three also significantly boasted its spectrum holding with the £250m acquisition of loss-making firm UK Broadband earlier this year.

Kester Mann, analyst at CCS Insights, said whichever proposals Ofcom put forward, the regulator was always going to draw criticism.

"Publicly, all four providers will likely express some dissatisfaction at the announcement, reflecting the huge importance of gaining new airwaves to satisfy the needs of their data-hungry consumers.

"However, Three’s immediate response represented a stinging attack on the regulator following months of campaigning for more favourable conditions."

He added that the sale is just as vital for O2, which has a similar spectrum holding as Three, but more than twice as many customers. "It also desperately needs a positive outcome at the auction, but today’s announcement at least offers some clarity to parent Telefonica, as it seeks an IPO of the UK business later in the year.

"The sale has already been a drawn-out affair and it is in the UK’s best interest to press ahead in accordance with Ofcom’s revised timetable. Any challenges or legal appeals against today’s statement would further delay the availability of much-needed spectrum, which would go against the best interest of UK consumers.

Back in 2013, Ofcom raised £2.34bn from its 4G auction. However, that process was delayed by 18 months due to legal wrangling between the operators.

Philip Marnick, Ofcom’s Spectrum Group Director, said: “We want to see this spectrum in use as soon as possible. With smartphones and tablets using even more data, people need a choice of fast and reliable mobile networks. These new airwaves will support better services for mobile users, and allow operators to innovate and build for the future.” ®

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