Although the merger Three UK and O2 had hoped for was blocked, the two operators have jointly expressed strong concerns about Ofcom’s upcoming spectrum auction.
Ofcom has confirmed it will hold an auction later this year for 190 MHz of spectrum across the 2.3 GHz and 3.4 GHz bands, releasing its detailed proposals today. Spectrum in the 2.3 GHz band can provide extra capacity and support higher download speeds, while the 3.4 GHz band is widely seen as a cornerstone for rolling out 5G services.
Both bands are highly sought after and bidding is expected to be intense, since this spectrum will play a key role in determining how competitive operators are in the coming years. EE gained an early advantage by launching 4G services ahead of its rivals and has reinvested the resulting lead to expand coverage and capacity. Today EE covers around 95 percent of the population with 4G and has become Europe’s largest 4G operator. That position also helped EE win the contract to build the UK government’s £1 billion Emergency Services Mobile Communications Programme (ESMCP).
At the time of that award, EE’s CEO Olaf Swantee said: “We are immensely proud to be selected to deliver this vital new network for Britain’s Emergency Services. We’ve worked closely with the Police and Ambulance crews to show the power of 4G in helping save time and save lives. We will now work tirelessly to deliver a highly resilient, truly nationwide 4G network to serve all of Britain’s Blue Light and First Responder teams across the UK.”
Smaller operators, particularly Three UK and O2, argue they are at a competitive disadvantage. The two companies previously sought to merge in a £10.25 billion deal to combine resources and spectrum holdings, but regulators at the national and European level blocked the merger over concerns that reducing the market to three major players would harm competition. Had it been approved, the combined business would have been the UK’s largest mobile operator by subscribers and would have helped rebalance spectrum distribution.
Three UK launched a “Make the Air Fair” campaign calling on Ofcom to cap any single operator’s spectrum share at 30 percent to prevent excessive concentration. O2 proposed a 35 percent cap. Ofcom’s proposals, however, set the cap at 37 percent.
Dave Dyson, Chief Executive of Three UK, responded sharply: “Ofcom’s proposal is a kick in the teeth for all consumers and in particular for the near-200,000 people who signed up to the ‘Make the Air Fair’ campaign. By making decisions that increase the dominance of the largest operators, Ofcom is damaging competition, restricting choice and pushing prices up for the very consumers that it is meant to protect.”
O2 CEO Mark Evans expressed disappointment but urged the process to continue: “The announcement from Ofcom falls short of our expectations but it is important we now press ahead with the auction quickly so that the spectrum can be obtained by operators that will deploy it for the benefit of consumers, businesses and ultimately UK plc.”
Three UK has previously warned it might pursue legal action if Ofcom did not change course. Dyson’s latest remarks suggest that legal options remain under consideration: “The mobile market is imbalanced and failing customers. Ofcom has shown little interest in tackling the problem. We will consider our response as a matter of urgency.”
As the auction timetable and final rules are confirmed, the outcome will shape spectrum ownership and competitive dynamics across the UK mobile market, influencing how quickly consumers and businesses benefit from faster 4G capacity and the rollout of 5G services.
Do you think Ofcom’s spectrum auction proposals are fair? Let us know in the comments.