Ofcom boss threatens nuclear option on 4G squabble
Agree on auction or I'll sic the politicians on you
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The head of the UK's communications regulator has threatened to bring in the politicians if network operators continue to squabble over next year's mega-auction of 800MHz and 2.6GHz bands.
We're still waiting to see what form that auction will take; Ofcom's first consultation on the subject produced such a storm of responses that it was forced to postpone the autumn publication of a proposed auction format. A new consultation on that proposal is now expected by the end of they year, but Ofcom's chief executive Ed Richards has preempted the widely expected legal challenges by threatening to hand control back to the politicians if the network operators derail the sell-off.
The operators all claim they want the auction to go ahead, publicly at least, but each of them has vested interests in how the auction is structured, and several have made it clear they're prepared to take court action to protect those interests.
In summary: O2 and Vodafone have lovely spectrum at 900MHz, which they were given when mobile networks were new and aren't prepared to give it up.
T-Mobile and Orange were, similarly, given spectrum at 1800MHz, but despite merging their holdings into Everything Everywhere, they want O2 and Vodafone locked out of bidding for 800MHz unless they give up some 900MHz goodness. O2 and Vodafone contend that EE has too much spectrum anyway so should be forced to sell some. Three, who arrived too late to be part of the great spectrum giveaway, wants restitution in the form of extra bidding rights or some free frequencies.
BT, meanwhile, sits on the sidelines shouting that any attempt to impose coverage requirements on specific lumps of spectrum would amount of an illegal state subsidy, and is prepared to stand up in court to say so.
Whose side is Ofcom on?
In public, the operators accuse Ofcom of timidity: each of them wants the regulator to stand up to their rivals and concede to their own demands - which are, of course, quite reasonable. After all, the frequencies up for grabs can be used for 4G services and include parts of the spectrum used by analogue TV, which is gradually being switched off.
"It has been very disappointing to witness the extent to which the incumbent mobile operators have chosen to entangle this process in litigation or threats of litigation," says Ed Richards in his speech to the European Competitive Telecommunications Association Regulatory Conference.
"When litigation becomes essentially strategic rather than based on objective grounds, and when it has the effect of holding back innovation and hampering growth, it is legitimate to ask whether the overall legislative framework fully supports the public interest in this vital area."
Ofcom can't change the legislative framework, the regulator's work is limited to what the government (the Ministry of Fun in particular) asks it to do. Ofcom can't make laws to compel operators to accept conditions on the mega-auction, but it can go back to ministers and ask for such laws to be enacted, and as Richards points out:
I am sure legislators would be all too willing to accept an argument which returns power in such matters to politicians, in the light of the apparent inability of the current model to make timely decisions where the national interest is at stake.
Ofcom is still planning to publish a new consultation on the mega-auction by the end of the year, and is constantly negotiating with the network operators in preparing that document. The fact that the regulator's boss is publicly threatening to set the politicians on those operators is not a sign that the negotiations are going well.
The speech [PDF, surprising pugilistic] goes on to talk about potential restructuring of the entire sub-1GHz band, including the possibility of giving up (or moving) broadcast television and the essential role played by government (and regulator) in forcing more efficient use of radio spectrum, including making tough decisions about mitigation technologies and spectrum allocations.
Ofcom may well be growing a set of balls, just as the network operators asked, but a bellicose regulator prepared to call in political might may not prove to be what the operators actually wanted. ®
COMMENTS
You ain't seen nothing yet
This is not only going to run and run, but will probably turn rather nasty before we're finished.
The situation for the 4G auction is rather different than the 3G one which went before it. When the 3G auction took place, there was far more money and cheap credit around, so the teleco's could make big bids in the full nkowledge that there was a demand for something faster than EDGE.
This time around the teleco's know the government is desperate for the cash, they are still trying to make money on 3G spectrum they purchased and the demand for faster mobile access doesn't seem as strong this time as 2G to 3G. The teleco's are more than happy to file injunction after injunction, take decision to the EU and challenge the government on any and evey point in the auctio document in order to protect their profit margtin and their business. It doesn't matter to them if this takes years to go through, because the longer this is delayed, the greater the utilisation of 3G is, and the more likely it is that the government will capitulate to their wishes as the government need the money from this auction.
The rent or lease options to me look unlikely. What if the telecos don't want that option, they simply don't rent the spectrum and we either have to hope that someone new comes along with very deep pockets to build 4G infrastructure and site new masts throughout the UK (and how long would that rollout take?) or that the rent is so low that it suits the telecos, but that's sure to be bad for the government coffers.
I fear we are still years away from seeing 4G in the UK.
Open auction...
"Why not get Ofcom to rent out the available bandwidth to the mobile operators?"
Given the terrible mobile pricing and service you suffer under in the UK, this spectrum should not even go to the incumbent mobile operators.
Anyway, what the FCC has generally done is 1) Some portion is set aside for newcomers to bid on. 2) Spectrum caps. Verizon and AT&T have plenty of cash to just buy up every hz of spectrum that comes up, and just sit on it so nobody else can have it. This prevents that to some extent. The spectrum cap would mean in effect that EE and perhaps some of the others may have to give up 900 or 1800 spectrum depending on how much 800 and 2.6ghz they intend to buy. 3) They don't have buildout requirements any more, but they are an excellent idea, both so one of the "regular" carriers doesn't just buy spectrum to keep it out of the others hands.. and also so if a newcomer buys it and then doesn't have money to do anything with it it isn't just sitting idle because of that.
Fixed Wireless Access?
A lower frequency for Fixed Wireless Access Broadband services would be good. Th 5.8GHz slot we are forced to use at the moment is rubbish for penetrating trees/buildings etc making LOS links to end users very tricky sometimes. And yes, in some rural communities it is the only answer.
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