BT and EE face Ofcom cap on mobile spectrum ahead of next auction
BT and its mobile unit EE could be blocked from bidding in the next spectrum auction meant to meet growing demand for mobile data.
Communications regulator Ofcom has proposed plans for a 255 MHz or 45% cap on the amount of immediately usable mobile spectrum that any operator can own amid concerns that BT and EE may end up dominating the market and squeezing out competition.
The cap would effectively block BT and EE from bidding for part of the spectrum that is currently used for high-speed 4G mobile broadband.
Ofcom is set to sell 190 MHz of spectrum in an auction next year, comprised of a 2.3 GHz band - which is used by 4G phones - and a 3.4 GHz band - which is not yet used but expected to power future 5G devices.
An Ofcom consultation document explained that if BT and EE were to win all of the 2.3 GHz spectrum available in this auction, it would increase their share of immediately usable airwaves from 45% to 49%.
"In other words, this one operator would have the almost same amount of spectrum as all the other operators put together. Our judgment is that this would create a significant risk to competition," the document said.
Competitors like Vodafone - which hold a smaller proportion of the mobile spectrum - will be able to take part in the next auction.
Vodafone currently holds 28% of the immediately usable UK mobile airwaves, while O2 holds 15% and Three holds 12%.
Ofcom is not placing a cap on the 5G band, because it is not yet usable.
EE chief executive Marc Allera said: "While we don't agree that competition measures should be introduced for this auction, we will now examine Ofcom's detailed proposal carefully and respond to the consultation.
"EE has relentlessly deployed all of its spectrum and network assets to deliver the very best network experience for customers, and we'll continue to work to ensure UK consumers benefit from being at mobile technology's leading edge."
Dave Dyson, the chief executive of competing mobile operator Three, has argued that Ofcom's proposals fall short of effectively safeguarding competition and is now calling for a 30% cap on spectrum ownership.
Mr Dyson says that Ofcom "has allowed BT and Vodafone to stockpile valuable mobile airwaves and put genuine choice for consumers at risk. It made empty promises to the European Commission that it would tackle this issue but it doesn't have the courage to do so.
"The mobile industry is failing customers and Ofcom has showed it has no interest in addressing that. A 30% cap on total spectrum ownership and a spectrum reservation for smaller operators are the only measures that will preserve competition for the benefit of UK mobile consumers."
Ofcom's consultation will be open for responses until January 30, 2017.