Précis - Everything Everywhere Limited ("EE") and Hutchinson 3G UK Ltd ("Three") have applied to Ofcom to transfer from EE to Three the rights and obligations which relate to the certain 1800MHz spectrum frequencies. The transfer would allow Three to launch a 4G network using similar spectrum to EE's new 4G network that was launched in October.
What? As previously reported by Eversheds, earlier this year the European Commission concluded that the merger of T-mobile and Orange to form EE would not restrict competition as long as EE would divest itself of a part of its 1800mhz spectrum.
Ofcom has confirmed that it will consider an application made by EE and Three to transfer the following frequencies:
- 1816.7-1826.7Mhz and 1721.7-1731.7Mhz to take effect from 1 October 2013; and
- 1826.7-1831.7Mhz and 1731.7-1736.7Mhz to take effect from 1 October 2015.
So what? The application will be considered in accordance with the Wireless Telegraphy (Mobile Spectrum Trading) Regulations 2011 (the "Regulations") and Ofcom's usual spectrum trading processes. Ofcom previously commented in a statement that the EE divestment would only be made to a purchaser approved by Ofcom and the European Commission. As a result of this, Ofcom confirmed at paragraph 3.21 of the statement that it did not intend to undertake an ex ante competition check under the Mobile Spectrum Trading Regulations for this divestment - such a competition check would usually be required in relation to a transfer of mobile spectrum.
In accordance with Regulation 8, Ofcom will have to consider whether or not the following circumstances exist before permitting the transfer:
- EE is in breach of the terms of the wireless telegraphy licences under which the relevant rights and obligations are to be transferred;
- Three is able to meet the terms, provisions and limitations of the wireless telegraphy licences which will be granted as a result of the transfer;
- Three is able to meet any criteria relating to the class of licences which will be granted; and
- It is requisite or expedient for Ofcom to refuse consent to the transfer on any of the grounds set out at Regulation 8(f) (such grounds include national security, for example).
Given Three already holds licences for other tranches of spectrum used for 3G services, it would be unlikely for Ofcom to refuse its consent to the transfer. However, the proposed transfer does raise questions as to whether or not the proposed process for the upcoming 800MHz and 2.6GHz auction will be appropriate, as various guarantees were included for a 'fourth national wholesaler' of mobile communications services. Despite the potential for queries, we expect that the industry will not want the transfer request to ruffle too many feathers after the work Ofcom has done to arrange for the digital switchover to be completed earlier than anticipated in order to make 800MHz and 2.6GHz spectrum available for use with new 4G networks sooner. With reports of EE's trade to Three having been released several months ago, one would hope that the application by those operators to complete the transfer would not be a particular surprise to any of the major stakeholders who will be bidding for 800MHz and 2.6GHz spectrum in the upcoming auction.