Is Three going to scupper the UK’s 5G plans?

UK operator Three’s continued flounce over not getting its own way could extend to legal action, resulting in the delay of the 5G spectrum auction.

The threat of legal escalation has lurked in the background throughout auction consultation period, in which Three has resorted to ever more bizarre publicity stunts to try claim public support for its assertion that no one operator should own more than 30% of the available licensed spectrum.

This week Ofcom decided to impose a cap but not as draconian Three wanted: 37% of available spectrum after the extra 190 MHz of spectrum that will be on the table when the auction eventually happens. EE currently owns 42% of the available spectrum but the cap means it will not only keep what it’s got, but be able to go for 85 MHz of 3.4 GHz if it wants to.

Three’s official response was the standard petulant response we’ve come to expect when things don’t go its way, with CEO Dave Dyson calling it “a kick in the teeth for all consumers.” He concluded his statement ominously by saying “We will consider our response as a matter of urgency,” but didn’t offer any specifics.

A report in The Telegraph reckons Dyson’s boss Li Ka-shing, Chairman of CK Hutchison Holdings, has been whispering in the UK Prime Minister’s ear to intervene on this matter but, to her credit, Theresa May has insisted it’s a matter for Ofcom. Hutch threatened legal action when its merger with O2 was blocked last year and it’s unlikely to have forgiven Ofcom for its role in that decision.

It’s thought that Mr Li may push Dyson in the direction of legal action even if the latter concludes it’s futile and that maybe the time has come to focus on competing rather than moaning. Having said that nothing seems to have been done to challenge the blocked merger so maybe Mr Li’s bark is worse than his bite.

If this does go to the courts it could take quite a while to play out. Having originally been scheduled for early 2016 it is now expected to take place in October of this year. If Three does mount a legal challenge the auction will almost certainly have to be delayed, which is likely to cause a fair bit of animosity towards Three from the rest of the industry.

Three’s own policy on Ofcom appeals laments the amount of speculative challenges brought against Ofcom decisions. “As a consequence, the ability of Ofcom to make timely decisions in the interest of consumers and competition has been eroded.” By its own stated rules Three would have to call for a judicial review, and prove illegality or impropriety to win.

There seems to be little sympathy for Three’s position, especially since it recently acquired some more spectrum of its own and is claiming to be capacity-starved while at the same time zero-rating Netflix streaming. If Three causes a delay to this auction and, as a consequence, sets back the UK’s 5G plans, that lack of sympathy could soon turn into outright hostility.