UK court rejects operator challenge over spectrum auction rules

UK court rejects operator challenge over spectrum auction rules
FILE PHOTO - A man talks on his mobile telephone as he walks past a BT logo in London, February 5, 2015. REUTERS/Suzanne Plunkett
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By Paul Sandle

LONDON (Reuters) – Britain saw off legal challenges on Wednesday from the biggest and smallest mobile networks that threatened to delay an auction of airwaves needed to meet fast-growing demand for mobile data.

In a bid to maintain competition, regulator Ofcom has set caps on how much spectrum individual operators can buy in an auction that will increase by almost a third the airwaves available to support mobile devices.

But BT , which owns Britain’s biggest operator EE, and Three, the country’s smallest player, both objected, with BT saying the restrictions went too far, and Three arguing they did not go far enough.

The auction is key for the country’s operators, which also include Vodafone <VOD.L> and Telefonica’s O2 <TEF.MC>, because the airwaves they control largely determine the quality of the service they can provide as customers demand faster connections.

One chunk of airwaves will be available to increase capacity immediately while the other is earmarked for the next generation of 5G mobile services.

“We are disappointed by the initial ruling of the court as a fairer distribution of spectrum is vital for UK consumers and the digital economy,” a spokesman for Three said.

“We are seeking permission to appeal.”

Under the Ofcom plan, no mobile operator would be allowed to own more than 37 percent of all the mobile spectrum expected to be usable in 2020, a cap that bars BT from bidding for the first chunk of airwaves in the 2.3GHz band and limiting the amount it could bid for the second 3.4 GHz band.

Three, which is owned by Hutchison Telecommunications <0215.HK>, had wanted the cap set at 30 percent.

Judge Nicholas Green said Three must submit its notice to appeal by midday on Thursday, with a hearing set for January.

BT said that while it did not believe caps were appropriate for the auction it would accept the ruling.

Vodafone would be restricted to winning no more than 160MHz across both bands.

BT currently owns 42 percent of immediately usable spectrum, while Vodafone owns 29 percent, O2 has 14 percent and Three owns 15 percent.

Ofcom welcomed the judgment and said it was disappointed that Three was seeking permission to appeal.

“We believe the High Court judgment is clear and Three’s actions may further delay the auction, which is not in the interests of the UK,” a spokesman said.

O2 said Three had its day in court and had lost, so it was frustrated to hear it may seek to appeal the judgment.

“Further delays are not in the interests of consumers, businesses and UK plc,” a spokesman said.

Britain’s mobile industry has routinely turned to the courts to settle disputes over resources, delaying previous auctions and frustrating the government which wants to improve communications to drive economic growth.

Ofcom had planned to auction the new spectrum by the end of the year when it set out the rules in July.

(Reporting by Paul Sandle, editing by David Evans)

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