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Ofcom, it's WAR! Mobe networks fire broadside over 2G spectrum pricing

PR offensive doesn't mention they were gifted it for free back in the 80s

Internet Security Threat Report 2014

The UK's mobile network operators have successfully kicked off their PR campaign against spectrum regulator Ofcom, painting themselves as surprised victims of governmental incompetence.

Most of the media coverage of Ofcom's tripled fees for the 2G frequencies focused on the potential for higher mobile pricing.

This left no space to mention that the introduction of Administrated Incentive Pricing was part of the Carter report in 2009 and was spelled out in the 4G auction proposals in 2010, making it far too late for the operators to act all surprised and hurt – but that's not stopped them.

The Daily Mail is, unsurprisingly, amongst the most outraged, telling us that Vodafone is "disappointed" and EE feels it is "excessive at a time when we are investing heavily in the roll out of 4G", but it's not alone in seeing the move as a revenue grab.

Adam Kirby from price comparison website uSwitch has been out and about, explaining to the Independent and the BBC that the network operators are fighting on our behalf:

"The good news for concerned consumers is that no increases have been confirmed as yet - Ofcom are now consulting on the fees" explains the uSwitch man. "It remains to be seen how much these costs will actually rise, and if the networks can fight back and keep a lid on these increases."

So in their narrative, the operators are fighting on behalf of their poor customers against a regulator who "wants to atone for the 4G auction shortfall" according to TechRadar, who has no doubt about what's behind Ofcom's numbers:

"On Thursday," the site explains, "the government body announced plans to cover the financial failure of this year's 4G spectrum auction, which brought in £1.2bn less than chancellor George Osborne had envisioned."

The Telegraph does have a more restrained view from JP Morgan, but not until paragraph 13 and following a headline which warns that "Mobile bills could rise after Ofcom quadruples spectrum fees".

All of which plays perfectly into the hands of the network operators, who were always going to oppose paying for the spectrum they were given back in the 80s. Claiming this comes as some sort of shock to them is disingenuous to say the least.

Administrated Incentive Pricing was always on the cards for the allocated bands; we were discussing it back in 2009 and you can be sure the operators fully expected it then, too. Not only that, but they'd have had a pretty clear idea how much it was going to cost when they bid for the 4G licenses, as Ofcom had made no secret of the calculations that would have taken that cost into account.

But the auction is over now, and with Three (the only operator not to have been allocated 2G spectrum) taking possession of EE's cast-offs, it too is arguing against Ofcom's long-laid plans, presenting a united front to the blogosphere – which is happy to blame the regulator for springing such surprise charges.

For operators this is a win-win situation: Ofcom can't give up the charges, which are necessary if the 2G radio spectrum is going to be tradeable with a realistic value. Without AIP the allocated spectrum would become hugely valuable, not to mention opening the way to litigation from operators who bid on the basis that AIP would be introduced on the 2G bands.

But the regulator might be convinced to cut the fees. Even if it does, the operators can still blame the next round of price rises, or lack of 4G coverage, on a greedy regulator acting on behalf of a rapacious government: a perfect result and the perfect start to a campaign which will last well into the new year. ®

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