4G SPECTRUM: BT faces 4G Ofcom auction challenge

Ofcom has proposed a cap on some of the newly available 4G spectrum it is preparing for auction, which would prevent BT from bidding.

The spectrum, formerly used by the Ministry of Defence, will provide 4G services for mobile companies.

The communications watchdog has suggested that a 42% share could be the largest one mobile company could own.

BT, which includes mobile network EE, currently owns 45%. Vodafone owns 28%, Three 15% and O2 12%.

These figures, provided by Ofcom, account for the existing spectrum available for "immediate use". The addition of the extra spectrum would bring BT/EE's share down to 42%, it said.

Firms have until 30 January 2017 to respond to the proposals.

However there is no suggestion that the cap could be extended to a different bandwidth of spectrum set aside to handle 5G when it launches in the UK, Ofcom added.

That comprises around 75% of the spectrum to be auctioned, it said.

EE chief executive Marc Allera said the firm disagreed with the idea.

"While we don't agree that competition measures should be introduced for this auction, we will now examine Ofcom's detailed proposal carefully and respond to the consultation," he said in a statement.

'Partial victory'

Three had lobbied for a 30% cap.

"If you've got one or two players in the market that dominate spectrum, then there is always a fear that innovation is slower because you don't have people pushing each other," Three chief executive Dave Dyson told the BBC in September.

Analyst Kester Mann from CCS Insight said the proposals represented "a partial victory" for Three.

"Expect this announcement to be just the start of another round of wrangling and protestation from the UK networks, that could see the award of licences further delayed," he said.

"Any additional hold-up works against Three and O2, which are most in need of new airwaves.

"The auction is crucial to UK providers as it will likely represent the last opportunity to buy mobile spectrum for several years."

Ofcom has not confirmed a date for the auction itself, which the BBC understands is expected to take place next year.

The total reserve price for all the spectrum on offer will be £70m ($86m).