Tesco Mobile complains to Ofcom

Virtual operator, real complaint

Posted in Mobile, 27th December 2007 12:13 GMT

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Tesco Mobile, and O2 which provides its network, has complained to Ofcom that changes to spectrum allocation could drive the supermarket's mobile offering out of business.

Tesco has realised that when O2 loses half its 900MHz spectrum in 2009 it will be Tesco Mobile customers who suffer, as the virtual operator camps on O2's 2G network at 900MHz, and the supermarket monolith isn't planning to lose coverage without a fight.

Two blocks of spectrum around 900MHz were given, without charge, to Vodafone and O2 in the early days of mobile telephones, to stimulate the growth of mobile telephony, and it's hard to argue that the policy was unsuccessful. Reclaiming that allocation will reduce the 2G coverage, or capacity, the operators can provide.

Ofcom argues that since it handed over the frequencies without charge it should be free to take them back without recompense, and the regulator launched a public consultation on the matter back in September.

If the blocks were auctioned then the conditions attached to their use could also be changed, allowing 3G services (or other technologies) to utilise what is quite an attractive frequency in terms of range and building penetration.

The Financial Times reports that O2 has joined Tesco in complaining that Ofcom shouldn't be taking their frequencies away. O2 will be able to mitigate the damage by getting their customers to switch to 3G networks, as should Vodafone who haven't commented on the matter.

But the supermarket warned it might have difficulty remaining "a viable force in the UK market" should the spectrum snatch go ahead.

Assuming some intelligent network design the loss of frequencies should reduce capacity rather than coverage, so if the operators can get more of their customers onto 3G then the impact should be minimal.

Tesco Mobile, however, only operates on the 2G network so could find their customers stuck in a technical cul-de-sac. Unless they decide to bid for the frequency themselves, or can convince O2 to do so for them.

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