3UK to buy 1800MHz spectrum from Everything Everywhere

Following the decision announced today by UK regulator Ofcom to allow Everything Everywhere (EE) to offer LTE services in its existing 1800MHz spectrum rom September 11, 2012, EE has revealed plans to sell part of its 1800MHz spectrum to 3UK.

The sale is in line with the European Commission’s competitive assessment of the merger of Orange and T-Mobile in the UK in March 2010, which required EE to divest 2X15MHz of its 1800MHz spectrum. However, a source close to both EE and 3UK told Telecoms.com that 3UK could face a long wait before it is able to launch services using the newly-acquired spectrum.

“EE is not required by the European Commission to clear that 1800MHz spectrum until October 2013 – so 3UK could have that spectrum in theory but would not be able to use it for another year,” the source said.

Ofcom and the European Commission will review whether the divestment satisfies the merger commitments, and a response is expected within the next three months, according to EE.

Earlier this year, 3UK’s CEO David Dyson revealed that the operator could also potentially wholesale capacity from EE’s LTE network, should EE gain approval to refarm its 1800MHz spectrum.

“There could be a way of getting access to [Everything Everywhere’s LTE] network, which the other networks – O2 and Vodafone – don’t have,” said Dyson. However, any potential arrangement would only allow 3UK access to EE’s LTE network six months after EE launches it, according to the source.

Furthermore, buying data on a wholesale basis would not be viable for 3UK, as the operator is focused on offering unlimited data plans.

“It isn’t a particularly attractive proposition; the economics don’t really stack, so that won’t happen now,” the source said.

Despite acquiring the spectrum, 3UK has still joined in the chorus of operators criticising Ofcom’s decision to permit EE to use its 1800MHz spectrum for LTE ahead of the 4G auction.

“Liberalization of 2G spectrum to date has distorted the competitive landscape in the UK, which ultimately harms consumers,” 3UK said in a statement. “Further liberalization without addressing competition issues could make that distortion worse.”