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Three challenges UK watchdog to a duel over mobile spectrum rules

Your move, EE

Brit mobile operator Three has formally filed its legal challenge to cap the forthcoming spectrum auction at 37 per cent, prompting fears that extra 4G airwave capacity and the rollout of 5G could be delayed.

Given the amount of noise Three has made in recent months about its intention to fight Ofcom in court, the filing comes as little surprise. It follows Ofcom's decision not to cap the total ownership of spectrum at 30 per cent, which Three had campaigned hard to secure.

Three's basis for the challenge was prompted by concerns that the 37 per cent cap on spectrum is not guaranteed as Ofcom intends to review its stance ahead of another spectrum sale.

A spokesman said: "We confirm that we intend to seek a judicial review before the UK courts in relation to the competition measures that will apply in the upcoming spectrum auction. Ofcom are aware of the decision.

"We anticipate a short process and a court decision by early 2018. Ofcom does not expect commercial 5G services in the UK before 2020, so this short process will not impact the availability of 5G to UK consumers."

Three has said the judicial review will only last three months. But if it wins the appeal, that could prompt further legal wrangling between other operators.

Last month EE threatened to file its own judicial review, which it has not yet submitted, in response to Three's challenge.

EE wants to split the rules for bidding on the different auction bands. It has accepted it will not participate in the 2.3GHz band, which will be used for 4G, but wants the cap removed for the 3.4GHz band, identified as central to the rollout of 5G. That latter band will not be auctioned until 2020.

An Ofcom spokesperson said: "It is very regrettable that the auction will now be delayed by this litigation, which will harm consumers, businesses and ultimately the UK economy. It is now crucial that companies don't drag their feet, so the case can be heard as soon as possible."

Kester Mann, analyst at CCS Insight, noted that Three will be one of the operators most immediately affected by a delay to the 4G auction, as it currently only holds 15 per cent of the spectrum.

BT/EE currently holds 42 per cent of immediately usable UK mobile spectrum, with Vodafone owning 29 per cent, and O2 14 per cent.

"The auction is already heavily delayed, as it should have originally happened toward back end of 2015," he said. "Spectrum is so vital for operators in offering services to consumers."

But that is a sacrifice Three appears willing to make. "They are very focused on getting better and more balanced spectrum landscape in the long-term," he said.

Independent analyst Matt Howett said: "I'm not necessarily convinced the legal process will be short, especially if everyone refuses to budge from their respective positions." The situation is reminiscent of the 4G auction in 2013, which was delayed by 18 months due to legal spats between operators.

But Howett said it would not necessarily be a disaster if the auction doesn't happen on the current timetable Ofcom proposed.

He added: "EE's suggestion of a split auction is interesting. But Ofcom may not want to lose face and completely change their approach to the auction given a lot of time and money has been spent getting to where we are." ®

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