Ofcom introduce new legislation to allow spectrum trading
Ofcom, the telecommunications regulator, have given mobile operators the green light to start trading spectrum which is used to operate mobile phone networks. Currently, Everything Everywhere (formerly T-Mobile & Orange), O2, Three and Vodafone have various frequency allocations in three bands (900MHz, 1800MHz, and 2100MHz) which are available for use to operate their networks. The new rules which have been required by central government mean that mobile networks will be able to trade these between themselves and also in the future may allow leasing them to other companies who may be interested in running a mobile network.
The question lies in what will happen when the new legislation comes in to force on the 4th of July 2011. Three and Everything Everywhere may well be interested in acquiring spectrum in lower frequencies such as the 900MHz band that O2 and Vodafone currently use, but with 800MHz to become available in the future, they may be better off waiting for the auctions of those to take place. Ofcom are currently proposing that network operators should have a limit to the amount of spectrum they can hold under 1GHz, although O2 believe that these 800MHz auctions, which allow next-generation mobile broadband such as LTE, are illegal. With this in mind, it could make 900MHz less desirable in the long term (the lower the frequency, the larger the range of the network). On the other hand, the EU are proposing that current frequencies should be made available for use by next-generation mobile network devices (4G) by the end of the year, which may make the 900MHz spectrum more valuable in the short term.
Three, the network with the least desirable spectrum (only operating in 2100MHz), feel slightly aggrieved by the rules as they are not likely to gain any benefit from trying to trade their existing spectrum.
"Spectrum is the lifeblood of the mobile internet and for those with surplus holdings it is also a strategic asset. This move simply allows those who have been gifted access to public spectrum to profit from it, with no benefit for UK taxpayers.
"Ofcom's ambition to deliver faster and more capable services to consumers is best served by a truly competitive allocation of this public asset."Three spokesperson
The full Ofcom document including the legislation can be found here (PDF).