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Does competition require equal shares of spectrum?

by Kane Mumford — last modified Mar 29, 2017 03:26 PM
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PolicyTracker has heard that regulatory affairs departments of mobile operators are increasingly being seen by boards as income generators rather than cost centres. Naturally, they have always existed as a way to increase profits but apparently they’re nowadays being told to chase everything they can.

UK operator Three has certainly been committed in its quest for more spectrum. It is throwing everything it can at the upcoming auction of 2.3 GHz and 3.4 GHz in the UK. 

After its Make the Air Fair campaign, which saw more than 150,000 members of the public pledge support for a 30 per cent cap on UK spectrum holdings, it is now threatening legal action if Ofcom does not hold to its proposal to prevent BT/EE from bidding on any spectrum in 2.3 GHz.

Three’s chief executive Dave Dyson recently said “it would be painful if [the allocation of] spectrum was delayed, but it is more important we find a long-term solution.”

But are competition concerns a strong enough argument for gearing the auction in Three’s favour? 

Ofcom doesn’t seem to think so. Its assessment is that all operators will remain credible if they win no spectrum at all in the forthcoming auction. BT/EE, which owns rights to about 45 per cent of the UK’s spectrum, has perhaps rightly questioned why Ofcom would propose caps if this is its position. 

The European Commission is also not convinced that an unequal distribution of spectrum necessarily leads to an unfair market. 

Telefonica – owner of the UK’s second most spectrum-shy operator, O2, which has 15 per cent of total holdings – has consistently told its investors that O2 is the best mobile asset in the UK, with industry-leading low churn. And it has started hosting two new – and large – MVNOs in Sky and TalkTalk. A strange move for an operator allegedly facing a strain on capacity.

Thinking about the future could mean operators will need to do something more radical than pursuing the litigious spectrum-grabbing approach of the past.

 
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Weblog Author(s)

Kane Mumford

Kane Mumford
Kane Mumford writes on spectrum policy, business and the arts. Before joining the PolicyTracker team, Kane covered private equity at the industry trade magazine Real Deals. He has contributed articles on music, drama and comedy to the Scotsman, the Edinburgh Evening News and various other publications. After graduating with an NUJ-accredited honours degree in journalism from Edinburgh Napier University, Kane spent time working as a copy editor at Babel Media and the Royal Bank of Scotland.

 

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