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Ofcom must do more to help operators invest in 5G

Telefónica UK boss Mark Evans warns that Ofcom is prioritising action on behalf of consumers to the exclusion of enabling the telecoms and mobile industry to grow

Mark Evans, CEO of O2 parent Telefónica has called on telecoms regulator Ofcom to listen more carefully to the opinions and ideas of the industry, saying that while the organisation rightly focused its energies on ensuring a fair deal for users, it needed to take a more balanced approach.

Speaking at a media event marking O2’s half-yearly results, Evans said: “I sense the regulator hasn’t got the balance right for our sector. It has been very much focused, understandably, on providing consumers value, which I acknowledge and respect, but I don’t think we’ve done enough to support the sector to grow.

“There are a couple of key areas where the regulator can make a phenomenal difference to enable this sector to invest and meet the demands that British customers have on mobile and digital connectivity.”

Evans picked on the issue of the current fragmentation of the 5G spectrum band in the UK. Currently, the four UK operators hold multiple “blocks” of 5G spectrum in the 3.4 to 3.8GHz band, but these blocks are not contiguous – except in the case of Three.

In practice this means that neither EE, O2, nor Vodafone are able to deploy 5G with the best possible speed and capacity.  To this end, Ofcom opened a consultation on the proposed defragmentation of the 5G spectrum band in June, which would allow the operators to swap and trade blocks to optimise their holdings.

Evans welcomed this but said that when he looked to Europe, Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Switzerland and Sweden had all already moved on spectrum defragmentation some time ago.

“We should look forward and ensure the right actions are being taken to maximise the opportunities that 5G will play out, but if we have fragmented frequency we’re simply not, as operators, going to be able to,” he said.

“The sector and business needs to recognise that this ought to be a no-brainer – this should be part of the conditions of buying new frequency. If you want to buy frequency, we should be clearing and organising the band for the sector’s benefit to get the most out of what is already a scarce resource.

“At the moment, the only commitment is to have a consultation, and it’s a shame because other European regulators have gone through that process and decided they’re going to act accordingly,” said Evans, who has already responded to the consultation with words to that effect.

In spite of some of its CEO’s qualms around O2’s ability to invest in its network, the first half of 2019 delivered solid results for the operator, with revenue growth up 5.1% year-on-year to £2.98bn and operating income before depreciation and amortisation (OIBDA) rising 6.4% to £919m.

O2 now boasts 33.3 million connections – including machine-to-machine (M2M) connections – in the UK, 25.4 million of its own connections, and the rest accessing its network through its mobile virtual network operator (MVNO) partners giffgaff, Lycamobile, Sky Mobile and Tesco Mobile.

It maintained its market leading customer churn rate of just 0.9% during the first six months of the year, and added 41,000 contract customers during the period, over half a million if counting M2M.

Read more about spectrum

  • Mobile spectrum in the 700MHz and 3.6-3.8GHz bands will be put up for auction either late in 2019 or early in 2020.
  • The GSMA warns that time is running out to ready enough radio frequency spectrum in the appropriate bands to account for the demands of 5G mobile networks.
  • A report commissioned by independent network builders’ body Inca has warned that current approaches to how spectrum is apportioned are leaving vast amounts unused, and this needs to change.

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