NEWS ANALYSIS A rock and a hard place


UK communications regulator Ofcom has been forced to make some tough decisions to bring the UK telecoms industry up to 4G speed. There’s good news and bad news in equal measure, with the regulator readily accepting that you can’t please all of the people all of the time.


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K communications regulator Ofcom is under pressure to bring the country up to speed, amid fears that it is lagging behind other European


nations in terms of 4G deployment. The necessary spectrum is not due to be auctioned until later this year, with rollouts not expected to begin until 2014. In January the regulator announced revised plans


to promote competition in the country ahead of the 4G spectrum auction. Ofcom believes that consumers are likely to receive better services at lower prices in the future if there are at least four operators in the market and that— without the right quality and mix of spectrum—an operator might struggle to compete with other national wholesale providers. The spectrum in the 800MHz band that is becoming


available, freed up from the nationwide switchover from analogue to digital TV, is equivalent to three quarters of the mobile spectrum in use today. This re-farmed 800MHz band will be auctioned along with higher frequency airwaves in the 2.6GHz band later this year.


The decisions Ofcom takes now are likely to affect the level of competition in the sector for at least a decade. Striking a balance was never going to be easy.


But from its latest consultation it is clear that Ofcom


continues to value 3UK’s disruptive nature, and intends to reserve spectrum in the 800MHz digital dividend band for the market’s smallest carrier. A marked change from previous proposals is that the regulator considers Everything Everywhere—which operates the T-Mobile and Orange brands—to have sufficient spectrum overall not to be protected in the same way. Industry analyst Ovum acknowledges that Ofcom has


essentially been stuck between a rock and a hard place. It wants to award these frequencies as quickly as possible in order to benefit consumers, but it also wants to ensure that it does so in a competitive way, as the decisions it takes now are likely to affect the level of competition in the sector for at least a decade. 3UK is likely to be quite happy with the proposals


because it is almost guaranteed spectrum in the sub 1GHz band. However, there’s a wildcard in the form of Everything Everywhere’s 1800MHz spectrum, some of which it is being forced to offload as part of the merger of T-Mobile and Orange. If 3UK, or a new entrant acquired some of the


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1800MHz from Everything Everywhere before the spectrum auction, Ofcom would not necessarily guarantee them spectrum in the 800MHz band. “On balance, Ofcom decided that Everything Everywhere’s


holding of 1800MHz is sufficient for the operator to use in order to deploy LTE, rather than worry about it getting access to 800MHz for that,” said Matthew Howett, analyst at Ovum. The regulator believes the benefits of operating LTE at 1800MHz are higher than operating at 800MHz, because 1800MHz allows more capacity. Of course the operator itself was not happy to hear the


news and criticised Ofcom for missing, “a huge opportunity for the UK to address the imbalance in sub 1GHz spectrum holdings, which has damaged consumer interests for the last 20 years.” The remaining UK operators, Vodafone and O2, are


likely to be the happiest at Ofcom’s revised proposals, with Vodafone claiming that the revisions bring the UK closer to a “fair and open auction that will benefit the wider economy, increase competition and ultimately lead to the creation of innovative new services for consumers.” As a parallel consideration for the forthcoming auction,


Ofcom has also outlined new proposals to extend 4G coverage to at least 98 per cent of the population. This builds on the initial requirement that one of the 800MHz licences up for grabs would oblige the holder to roll out a 4G network that provides coverage to 95 per cent of the UK population. Due to a recent government investment plan, which will see £150m go towards the elimination of ‘not spots’ in the UK, Ofcom believes its new condition can be strengthened in one of two ways. The first option is to increase the coverage obligation


attached to that licence to 98 per cent of the UK population. The second and, in Ofcom’s view potentially more effective option, is to require that this 800MHz spectrum license has a condition that forces the buyer to provide 4G coverage that not only matches existing 2G coverage but also extends into mobile ‘not spot’ areas of the UK where the £150m will provide infrastructure capable of supporting 4G coverage. This may have the potential to extend 4G mobile coverage even further than 98 per cent of the population, according to Ofcom. According to Ovum’s Howett, the country may be lagging behind its European neighbours but the regulator has not done a bad job. “The decisions Ofcom takes now are likely to affect the level of competition in the sector for at least a decade. Striking a balance was never going to be easy. The set of proposals now on the table appear to leave everyone with something to be optimistic about, but at the same time requires compromises to be made. Perhaps Ofcom have got it right.” n


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