Three threatens Ofcom with legal action over 5G
A SALE of airwaves crucial to improving mobile signals came under attack last night, as one of the world’s richest men issued a formal legal threat to Britain’s telecoms regulator.
Lawyers for the mobile operator Three, part of the CK Hutchison empire controlled by Hong Kong billionaire Li Ka-shing, hand-delivered a letter to Ofcom signalling a High Court challenge to the rules of a forthcoming multi-billion pound radio spectrum auction. The threat of years of wrangling has prompted talks between Ofcom and Three’s rivals over ways to increase mobile capacity and coverage, including renting airwaves until legal action is complete. Sources said O2 last week proposed a new system of temporary licences in a meeting with regulators. O2 has the smallest share of the airwaves and is increasingly concerned it will run out of capacity as customers consume more data on the move.
Three’s letter before action, seen by The Daily Telegraph, accuses the regulator of breaking the law in failing to tilt the sale further in its favour. The operator formally threatens a judicial review and claims Ofcom’s decision is “liable to be quashed unless it is revoked and remade”.
Three claims that BT and Vodafone’s dominance of the airwaves harms competition. Ofcom’s opposition to its failed attempt to merge with O2 means it must rebalance the market in the spectrum auction, according to the letter.
Ofcom has proposed to cap the share of the airwave any operator can hold after
the sale at 37pc, but Three says the restrictions on its bigger rivals are not tight enough.
Three alleges that Ofcom’s plans “fail completely to achieve … the decision’s own basic objective of avoiding very asymmetric spectrum shares”. It alleges that the proposed auction rules could mean BT has a share of more than 39pc until 2020, when another sale of airwaves is planned.
At that point Three claims Ofcom could abandon the 37pc cap, rendering it “simply meaningless”.
Ofcom is also accused of failing to properly consider Three’s own proposal for tighter restrictions that would have meant BT would be immediately capped at 37pc rather than in 2020.
Three’s move towards a judicial review is a blow to Ofcom and its rivals, who despite their own concerns over the auction rules have all indicated they will not mount legal challenges. The regulator, under pressure from the Government, is keen to complete the sale as soon as possible so operators can prepare for the launch of a faster and more reliable 5G mobile internet service in the next few years. Most of the airwaves due for auction are not immediately usable but are expected to be crucial for network upgrades.
An Ofcom spokesman said: “Our auction will help support the UK’S fourplayer mobile market, which has provided choice and value to customers for many years. We want to see new spectrum in use as soon as possible, so operators can build for the future and the UK can start benefiting from 5G mobile by 2020.”
Dave Dyson, Three’s chief executive, said last week that no decision had been taken on whether to apply for a judicial review. He claimed the High Court process could take only three months.
Ofcom declined to comment on O2’s call for a rental system to be set up, citing confidentiality. As well as capacity concerns, the operator is keen to secure spectrum ahead of a potential stock market float.
It is understood O2 urged Ofcom to sell temporary licences in the 2.3GHZ band, which is immediately usable, that would be handed back once a full sale can take place.