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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. ®

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