Following a recent meeting with the UK's mobile industry, Business Secretary Lord Mandelson was quoted as finding himself ‘encouraged' by the discussions on future spectrum plans. He also said he expected a resolution of ‘remaining issues' within a few days. Unfortunately for the noble lord, the announcement this week of the joint venture (JV) between T-Mobile UK and Orange UK seems likely to throw into disarray the UK Government's plans for a spectrum auction early next year.
Ofcom's independent spectrum broker Kip Meek in his May report on how the Digital Britain goals could be attained, recommended a reshuffle of the existing spectrum allocations held by UK mobile operators. This plan involved mobile operators giving their rivals access to frequencies they already own and putting a limit on how much spectrum each operator could purchase. But this plan was predicated on there being five mobile operators in the UK but following recent developments there seems likely there will only be four.
To efficiently provide high speed wireless data services to rural and remote areas the Digital Britain plan required the deployment of 3G in the 900MHz band, a move which was also mandated by an EU Directive which comes into force in October. But only Telefonica O2 and Vodafone have 900MHz spectrum, originally allocated to them with their GSM licences, with T-Mobile UK and Orange UK having spectrum allocations in the 1800MHz bands. All four operators plus 3UK also have spectrum in the 2.1GHz band for 3G provision.
So in order for all operators to be involved in the Digital Britain initiative, and to meet the EU requirements, Vodafone and Telefonica O2 would have been required to give up some of their 900MHz spectrum, something they were understandably reluctant to do. The new JV offers the two 900MHz spectrum holders hope as its formation will mean the current UK government will almost certainly have to defer its plans and if there is a change of government in 2010, it is likely that Ofcom's proposals will be thrown out.
Other complications arise from the fact that the Government was planning to auction off spectrum in the 800MHz band early next year, again for the deployment of 3G. However, if no decision has been reached by the EU on the merger of T-Mobile UK and Orange UK by the time the auction is held, the new entity will be effectively frozen out of the bidding process.
With the 800MHz auction almost certain to be delayed and ongoing uncertainty with regard to the disposition of the 900MHz spectrum, the dream of a Digital Britain powered by high speed wireless seems to be receding fast.
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