BT mo­bile unit wades into 5G bat­tle

The Sunday Telegraph - Money & Business - - Front Page - By Christopher Wil­liams

BT’S mo­bile arm EE is pre­par­ing to go into bat­tle with ri­val op­er­a­tor Three over bil­lions of pounds worth of air­waves, amid fears of de­lays to 5G net­work up­grade plans.

EE will to­mor­row for­mally threaten the tele­coms reg­u­la­tor Of­com with a High Court chal­lenge over the planned auc­tion of ra­dio spec­trum.

The move is de­signed to head off another le­gal at­tack on the sale by Three, the small­est of Bri­tain’s four main mo­bile net­works, which is owned by the Hong Kong con­glom­er­ate CK Hutchi­son. Three’s planned ju­di­cial re­view aims to im­pose tighter re­stric­tions on the share of the air­waves EE is al­lowed to buy. EE now fears any changes to the auc­tion rules as a re­sult of that ac­tion could un­der­mine its am­bi­tion to take a lead in the roll-out of 5G tech­nol­ogy, which prom­ises faster and more re­li­able mo­bile in­ter­net ac­cess.

Amid dif­fi­cult trad­ing and reg­u­la­tory up­heaval else­where in BT, its mo­bile arm, ac­quired last year for £12.5bn, is viewed by group chief ex­ec­u­tive Gavin Patterson as a strong per­former with a lead on the com­pe­ti­tion that should be main­tained. It has a cen­tral role in BT’S strat­egy as mo­bile and fixed line net­works are in­creas­ingly ex­pected to com­bine to pro­vide more seam­less in­ter­net con­nec­tions.

EE, the coun­try’s largest mo­bile provider with 30m cus­tomers, had planned to set aside its ob­jec­tions to the auc­tion rules pro­posed by Of­com in the hope of se­cur­ing ac­cess to 5G spec­trum as soon as pos­si­ble. Chief ex­ec­u­tive Marc Allera said Three’s ju­di­cial re­view threat re­quired a counter-stroke.

He told The Sun­day Tele­graph:

“We’re sup­port­ive of Of­com’s goal to re­lease air­waves quickly, and we don’t want this chal­lenge to slow down that process, but Three’s lat­est ac­tion has forced our hand. This is our last re­sort. We’ve been con­sis­tently op­posed to the cap that Three is try­ing to make even more re­stric­tive.

“The UK needs con­tin­ued 4G in­vest­ment and a clear path to the in­tro­duc­tion of four high-qual­ity 5G net­works. We can­not risk be­ing out­per­formed by coun­tries across Europe.” The gath­er­ing storm around the auc­tion threat­ens to blow off course Of­com and gov­ern­ment plans for Bri­tain to be part of the 5G van­guard.

The sale, al­ready de­layed by a failed at­tempt by Three to buy O2, is sched­uled for this year but is likely to be held up for months by High Court wran­gling. De­lays are likely, though EE’S chal­lenge could be heard at the same time as its ri­val’s.

Of­com is due to sell off chunks of the air­waves in two fre­quency bands. As well as 5G spec­trum, which is not ex­pected to be com­pat­i­ble with smart­phones un­til around 2020, it is auc­tion­ing a lower fre­quency that is al­ready used in 4G hand­sets.

O2, which has the small­est share of the air­waves, is keen to get its hands on that spec­trum as soon as pos­si­ble to guard against a ca­pac­ity crunch on its net­work as de­mand for mo­bile data sky­rock­ets. It ap­pealed to Of­com to cre­ate a leas­ing sys­tem while po­ten­tially lengthy le­gal bat­tles are fought. In a show of “prag­ma­tism”, EE, which has the largest share of the air­waves at around 42pc, said it would stand aside if Of­com were to auc­tion the less con­tentious lower fre­quency sep­a­rately.

Its chal­lenge to the auc­tion rules is fo­cused on the higher 5G fre­quency, where Of­com plans to im­pose a 37pc cap on the over­all share of the air­waves an op­er­a­tor is al­lowed to own.

Three has called for a tighter cap and based its le­gal chal­lenge on claims the reg­u­la­tor could wa­ter down the rules later.

EE now plans to ar­gue in court there should be no cap. It has also urged Of­com to con­sider bundling the air­waves into a 5G su­per-auc­tion along­side other fre­quen­cies due to be made avail­able in the next few years.

The Hol­ly­wood ac­tor Kevin Ba­con has been the celebrity face of EE’S tele­vi­sion ad­verts for a num­ber of years

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