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BT and Three risking UK’s 5G leadership potential, says Ofcom

In an article in the Financial Times, Ofcom CEO Sharon White criticises mobile operators for holding up the auction of radio spectrum that is vital to the planning of 5G

Legal challenges by mobile network operators (MNOs) BT-EE and Three are in danger of holding up the much-needed auction of spectrum to support the future deployment of 5G mobile networks, and could put at risk the UK’s ability to become a world leader in 5G, Ofcom CEO Sharon White has warned.

In a wide-ranging statement published by Ofcom, which originally appeared in the Financial Times, White said the UK urgently needed investment in the networks that “will help our digital economy flourish”.

This, she said, was not only because of the potential for growth, but to support businesses as the UK moves through the process of leaving the European Union (EU).

In support of this, Ofcom is currently working on the auction of two tranches of radio spectrum formerly owned by the Ministry of Defence – 40MHz in the 2.3GHz band and 150MHz in the 3.4GHz band. The 2.3GHz band is designed to improve the quality of service and coverage on existing 4G long-term evolution (LTE) networks, while the 3.4GHz band is designed to be set aside to form a base for the UK’s MNOs to build their 5G networks.

This process has already seen lengthy delays, and was suspended for some time due to the uncertainty created by BT’s acquisition of EE in early 2015, and the proposed, but never finalised, acquisition of O2 by Three.

However, due to its smaller scale compared with the combined forces of BT and EE, Three had lobbied the regulator to impose a cap on the amount of spectrum that BT-EE could own after the auction. Although Ofcom did indeed impose a cap in its final decision, it was not to the extent that Three had wanted, and so the operator filed a legal challenge at the beginning of September 2017. Subsequently, BT-EE also filed a lawsuit, in part to make sure that its voice is heard.

White said Ofcom was mindful of its remit to maintain a level playing field, but this did not necessarily mean everyone should have an equal share of available spectrum, and she said the regulator would defend its first decision.

“The courts have agreed to fast-track litigation, but the benefits for mobile users will inevitably be delayed,” she wrote. “We planned to complete the auction this year. Now we will be in court in December. We believe that auctioning some 5G airwaves early would allow companies to start the vital groundwork to make 5G a reality as soon as possible.

“We appreciate companies must look after their own positions. But commercial interests must not derail a golden opportunity for the UK to achieve leadership in 5G and be among the world’s best-connected nations, which will benefit consumers and businesses and give our economy a competitive edge.”

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A Three spokesperson disputed White’s claims, saying: “It is absolutely vital that the regulator gets this auction right for the long-term benefit of all consumers. According to Ofcom, 5G services are not set to roll out in the UK until 2020, so our legal action will have no impact on the roll-out of this new technology.”

EE declined to comment directly on White’s remarks. However, CEO Marc Allera recently wrote about the firm’s reasoning for going to court, and argued that taking time now to get the 5G spectrum auction right would benefit the UK economy in the medium to long term.

Allera argued that the current proposals for the auction of 5G spectrum bands, by making small tranches available bit by bit, would ultimately be detrimental to the launch and development of 5G services in the UK.

“We believe there is now an opportunity for Ofcom to restructure the auction of spectrum for 5G, bringing together 3.4-3.6GHz, 3.6-3.8GHz and 700MHz into one, single auction that will allow far more effective planning for all operators and result in a stronger 5G platform for the UK,” wrote Allera. “Ofcom has focused too narrowly on pushing through an auction of 3.4GHz, which will hinder operators’ ability to make clear investment decisions.”

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