July 24, 2012

O2 Hits Out at Ofcom over 4G Decision

4G Wireless Network Coverage : Better UK Coverage

4G Wireless Network Coverage : Better UK Coverage

O2 has condemned Ofcom of being ‘wrong on all counts’ following its decision to provisionally grant permission for Everything Everywhere to liberalise its spectrum for 4G.

In an unusual attack, O2 said Ofcom should look again at the decision, which would see Everything Everywhere able to launch 4G services by the end of the year. Vodafone has also spoken out against Ofcom’s decision, saying that it had had made ‘three fundamental errors’.

Everything Everywhere has said that even if it does get permission to be first to offer 4G services, any competitive advantage it gains ‘will not be unmatchable or enduring’. The company also said that both Vodafone and O2 could have taken the opportunity last year to refarm their 900MHz spectrum for LTE but chose to go with a 3G offering instead.

O2’s attack came in its formal response to the Ofcom consultation on spectrum plans for Everything Everywhere. The focus of the argument is Ofcom’s assertion that liberalisation was dealt with when the Orange/T-Mobile merger was scrutinised by the European Commission. However, O2 stated this was ‘wrong’ and said that Ofcom had not read its own research properly.

O2 stated: ‘In the evidence obtained under [the Freedom of Information Act], Ofcom explicitly states there must be two LTE1800 players on the market at about the same time, not a monopoly. It is unclear to Telefónica why Ofcom has not bothered to review its own contemporaneous documents on the merger before issuing this very important consultation.’

Vodafone’s response repeated that giving Everything Everywhere permission to refarm spectrum would ‘seriously undermine competition… for many years to come’.

It said that Ofcom has not properly considered whether its decision would distort the market because it failed to consider that Everything Everywhere has the most stores and customers, along with an HSPA+3G service.

Ofcom claimed that Everything Everywhere would have at most 15 months over its rivals if it offered 4G first. But Vodafone said this would be far longer as rival networks would have to set up from scratch. It said Ofcom should wait to allow Everything Everywhere permission until all operators were able to offer a ‘credible’ 4G service.

Everything Everywhere replied by saying that there were a number of issues that would stop it having a major advantage – including the lack of suitable phones and that ‘the full capabilities of LTE would not be realised for a number of years’. It reiterated that letting it offer a small-scale 4G service would benefit consumers.

CEO of Everything Everywhere, Olaf Swantee, said: ‘Being one of several potential companies able to launch 4G this year does not make us a “monopoly”. This is exactly the type of rhetoric that is designed solely to delay the launch of 4G in the UK.’