Ofcom delays auction of 4G spectrum

Ofcom delays auction of 4G spectrum

Telecoms regulator Ofcom has decided to delay the start of its auction for another chunk of 4G spectrum amid an ongoing legal challenge from Telefonica and Hutchison, the parent companies of O2 and Three respectively.

A proposed merger between the two companies is currently being examined by the European Commission, with both firms arguing Ofcom should wait until a decision is made about the plans.

Ofcom has since agreed to delaying the auction of the 4G spectrum, having confirmed it had received letters from both Telefonica and Hutchison outlining intentions for legal action.  

In a statement, Ofcom said: "After careful consideration, given these specific circumstances, we have decided for reasons of good public administration to delay commencing the auction process."

Applications for the spectrum had been due to start this month ahead of an auction in February or March.

Reports suggest it could now be delayed until at least the summer, with the European Commission's decision unlikely to be made until May.

The spectrum on offer, which has a reserve price of £70 million, is set to offer capacity to the UK's 4G networks but is still substantially smaller than the previous chunk of 4G spectrum.

Matthew Howett, an analyst with research company Ovum, told BBC News: "While Ofcom doesn't have spectacular form when it comes to awarding spectrum on time, in this instance it probably makes sense to delay things.

"Should the merger between Three and O2 be approved, then remedies around spectrum holdings will almost certainly take time to work out and any future spectrum award would need to be reconsidered accordingly.

"However, if the… merger is blocked, then the spectrum award can go ahead fairly quickly without change."

He concluded by stating that the impact on customers was likely to be minimal.