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Spectrum Refarming Splits The Industry

Spectrum Refarming Splits The Industry

The decision last month by UK spectrum regulator Ofcom to allow radio systems operators to re-sell the resources they own – the so-called re-farming of frequencies– has provoked fears that any re-allocation won’t be easy or pain-free; and there are those who feel that the whole notion of selling current allocations is fundamentally flawed.

Kevin Russell, UK chief executive of 3, has already warned that the re-farming of frequencies for 4G mobile services could destabilise what he calls the fragile competition in the UK and potentially result in 3 UK disappearing from the market.

He told Ofcom’s political masters on the Commons Culture, Media and Sport Committee that the planned re-farming would set up the competitive structure of the UK mobile market for the next 10 years. He warned that, following the merger of Orange and T-Mobile, 3 UK would not be able to grow as quickly as needed without access to spectrum, saying that the effect on market competition of the Orange/T-Mobile merger had not yet been felt; he expressed anger that rivals O2 and Vodafone have been using refarmed spectrum for 3G services without having to pay higher fees.

Ofcom’s decision would allow operators to sell off the frequencies they own in the 900MHz, 1800MHz and 2100MHz bands. Historically, the 900MHz slice of spectrum has belonged exclusively to O2 and Vodafone because they were the only two mobile operators on the market when it was handed out.

While other nations – including cash-strapped Greece – have reallocated this spectrum to offer a more level-playing field ahead of 4G auctions, this has not happened in the UK. Ofcom had originally planned to redistribute the spectrum allocated to O2 and Vodafone, but was met with a legal action, initiated by the two operators; Ofcom dropped its plans following the merger of T-Mobile and Orange.

Everything Everywhere (EE), the parent company of T-Mobile and Orange will be the biggest beneficiary of spectrum trading. It was required to sell off about 19 percent of its spectrum frequencies as a condition of the merger.

But 3 is most unhappy as it has the least spectrum to trade. “Spectrum is the lifeblood of smartphones and the mobile internet and for those with surplus holdings it is also a strategic asset, so voluntary trading is the exception,” it said in a statement.

“There are two things I can guarantee,” says ATDI managing director Cyprien de Cosson. “One is that everybody involved will need the best in planning and modelling to make this viable. The other thing is that there will be plenty of sound and fury before this is done.”

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