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O2 looses legal torpedo at Everything Everywhere 4G monopoly

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Mobile phone operator O2 will appeal against Ofcom's decision to allow a rival firm to launch superfast broadband services later this year using its existing network capabilities, according to media reports.

O2 has written to the telecoms regulator to announce its intention to appeal Ofcom's decision to the Competition Appeals Tribunal, according to a report by the Guardian. An O2 spokesman told Out-Law.com that the company would not comment on the issue.

Earlier this month Ofcom announced that it would allow Everything Everywhere (EE), which owns Orange and T-Mobile, to use its existing network to deliver next generation '4G' services to its customers from 11 September this year. EE has already committed to create a new brand around the 4G services.

At the time of the announcement O2 raised concerns that the decision "undermines the competitive environment for 4G in the UK" and said that it meant that "the majority of consumers will be excluded from the first wave of digital services". Vodafone also raised objections to the decision. Ofcom is not due to auction off frequency spectrum that would enable EE's competitors to offer 4G services until next year.

"Mobile operators are expected to start rolling out 4G networks using the auctioned spectrum from the middle of 2013, and to start offering 4G services to consumers later that year," Ofcom said in a statement in July.

The term '4G' is generally used to refer to mobile broadband services delivered using the next generation of mobile broadband technologies; including Long Term Evolution (LTE) and WiMAX. LTE technical standards make more efficient use of radio spectrum, which makes them ideally suited for the high bandwidth data services including video streaming, social networking and GPS and mapping services used by smartphones and laptops.

Mobile phone companies were first awarded varying amounts of spectrum at 900MHz and 1,800MHz in the 1990s on the condition that this could only be used for 2G services, mainly voice calls and text messages. In 2011, Ofcom ruled that this could also be used for 3G services as part of its plans to "liberalise" spectrum use for the benefit of consumers. Its response to Everything Everywhere's application is its first decision on the use of the spectrum for 4G services.

Mobile data use is expected to reach 18 times its current levels by 2016, with the number of mobile connected devices globally reaching 10 billion in that period, according to Culture Secretary Jeremy Hunt. In a speech on the national broadband strategy earlier this month, Hunt said that the Government's "working assumption" was that mobile devices would ultimately become the "preferred method of going online".

Additional spectrum is due to be released as part of an auction process in the 800MHz and 2.6GHz bands later this year, a combination of high and low frequencies which the regulator has claimed will enable operators to offer widespread mobile coverage at faster speeds. Ofcom said that this additional capacity would enable other operators to launch "competing services" from next year.

EE's chief executive, Olaf Swantee, has previously indicated that any challenge to Ofcom's ruling could cause it to launch its own legal objections against the regulator's rules for the 4G auction.

"I will commit here and now to support the auction process, even though there are aspects of the auction rules that we don't like," Swantee said last week. "However, and I am hoping it doesn't come to this, if there is litigation against Ofcom's ruling, we will have no choice but to review our position."

Copyright © 2012, Out-Law.com

Out-Law.com is part of international law firm Pinsent Masons.

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