Tuesday, 21 June 2011
The owner of Orange and T-Mobile can finally meet European competition regulations and sell off spectrum, after Ofcom approved a trading mechanism for the commodity that is crucial to the mobile industry.
The telecoms watchdog announced yesterday that it had given UK operators the green light to trade their spectrum, which Ofcom says is worth £40bn a year to the economy, and which Three UK calls the “lifeblood of smartphones and the mobile internet”. More than 12 million of the 80 million mobiles in the UK are smartphones, whose demands for data place huge strain on the networks. “The new regulations are aimed at giving operators added flexibility, which could help them meet some of those demands,” the regulator said.
Everything Everywhere (EE), the parent company of T-Mobile and Orange, was required to divest about19 per cent of its spectrum frequencies as a condition of the merger of the two operators, but was unable to do so until Ofcom approved a spectrum trading mechanism.
One source close to EE said that beyond its required sales, a free market for spectrum was positive for the industry as the ability to trade “leads to more competition and, in theory, higher quality networks”. Yet spectrum is the most highly prized commodity among telecom operators, which are unlikely to sell it to rivals voluntarily.
Three feels that Ofcom did not go far enough. A spokesman for the operator said: “Ofcom’s ambition to deliver faster and more capable services to consumers is best served by a truly competitive allocation of this public asset.”
Ofcom is also preparing a spectrum auction to form the backbone of forthcoming 4G services.