Updates to this story
In what is the first sign of a 4G spectrum allocation bloodbath on the way, O2 has angrily hit out at Ofcom, accusing the watchdog of breaking EU law.
With the prospect of grasping lucrative 4G or LTE mobile broadband spectrum, punches are being thrown over the way that spectrum is being allocated, and O2 has seemingly landed the first blow.
O2 is accusing regulator Ofcom of giving “state aid” through “spectrum floors” which means other firms will have the potential to grab sub 1GHz spectrum at knock down prices.
The barney is over the 800Mhz range, useful for accessing signal through buildings and in more remote locations.
O2 is disputing that it has already purchased sub 1GHz spectrum, as has Vodafone, accessing the 900MHz range.
O2 argues that it is altogether different from the 800MHz range which it believes rivals could get a better deal through an auction process.
“The argument that Vodafone and ourselves already have enough sub-1GHz spectrum, are based on the mistaken belief that 800 MHz and 900 MHz are directly comparable spectrums,” O2 said in a statement.
“They are not.”
It is O2’s belief that by using the spectrum floors Ofcom will allow “all bidders, except Vodafone and O2, to potentially acquire spectrum at discounted prices”.
The firm believes this is “state aid” and “therefore illegal under EU law”, and contests that according to Ofcom figures this could cost the taxpayer £1 billion.
Harsh words indeed, and it seems that O2 has a right to be worried.
Ernest Doku at uSwitch believes that the auction process is becoming a battleground with operators desperate to control valuable bandwidth.
“They definitely need to have as level a playing field as possible,” he told TechEye.
“And with other firms such as EverythingEverywhere also vocal, everyone feels that they are on the same level.
“So what O2 have said is surprising, but really it is to be expected as it is inevitable they will try to defend their corner to grab highly valuable 4G spectrum."
TechEye spoke to an Ofcom spokesperson who said it's no surprise anger has been raised over the 4G auctioning process.
“Ahead of a final publication of auction process concerns being voiced by operators are to be expected,” he told us, “and we are aware that they want to put across their views.”
“The reason why it is so contentious is that some operators already own different amounts of spectrum at different points.
“So there are fears that with the new spectrum becoming available one operator might be put ahead of another.
“However we are well aware of the state aid rules and would not be acting in a way that would contravene these.
“We will be considering responses and ahead of a full decision in the autumn.”