Ofcom and mobile operators need to ensure the 4G auction takes place as soon as possible so the UK does not fall behind competing nations, MPs urged today.
A report from the Culture, Media and Sport Committee gave Ofcom its backing in how the regulator has handled the auction, despite delays to the sell-off.
The committee said Ofcom had been doing an admirable job in response to industry in-fighting over how the auction was being run.
"Ofcom has had a very difficult job adjudicating between competing and polarised interests, and we are concerned that constant disagreement and special pleading from the four mobile network operators appears to have further delayed the spectrum auction," said John Whittingdale MP, chair of the committee.
"We believe that the basic rules for the auction which Ofcom has laid down are sensible and fair, and that further delays will result in the UK falling further behind in this vital area. The auction needs to proceed as soon as possible."
However, the report suggested Ofcom could push industry to go further in spreading mobile broadband into rural areas.
"We believe that Ofcom needs to go further than it currently proposes by setting a condition that at least one of the new licence holders must achieve 98 per cent coverage across the country," Whittingdale added.
Everything Everywhere concerns
MPs also raised concerns over Everything Everywhere's sale of 1800MHz spectrum, which it currently licenses from the Government.
"Where a mobile provider is set to gain a windfall from the sale of what was originally a public asset, Government and Ofcom should find a way to ensure that at least some of the proceeds are invested for public benefit," MPs said.
Everything Everywhere said it was going to use funds acquired from the sale to benefit customers.
"As part of the merger of Orange and T-Mobile to create Everything Everywhere, we are required to sell some 1800MHz spectrum, for which we pay 33 million in license fees to government each year," an Everything Everywhere spokesperson said.
"It is our intention that all proceeds from the sale of this spectrum will be invested into our UK network to benefit our customers across the country."
Industry bickering
Mobile operators have been squabbling with one another over how the auction is being handled. Earlier this year, 3 and Everything Everywhere raised concerns Vodafone and O2 had gained an unfair advantage in being allowed to use their 900MHz spectrum for 3G use.
Vodafone and O2 then said they were worried about auction floors, which were introduced by Ofcom to ensure at least four operators got a slice of the spectrum that is due to go on sale in late 2012.
MPs said Ofcom had chosen the right option in both cases, however.
"The committee examined the issue of some operators using their allocated second generation (2G) bandwidth for third generation (3G) mobile services, and concludes that this liberalisation has not permanently distorted the market in favour of those licence holders," the committee said.
"The committee agrees that Ofcom's proposals to implement spectrum caps and floors at the auction is the best viable option to ensure competition in the spectrum market place."
Ofcom believes delays to the actual auction will not harm rollout in the UK as this will not be possible until 2013 at the earliest.
The regulator is currently exploring operators' comments on the auction. O2 said it is planning on issuing fresh consultation documents soon.
