BT and Vodafone Face Bidding Restrictions in U.K. Wireless Sale

The U.K.’s communications regulator plans to limit the amount of wireless spectrum BT and Vodafone can buy at a coming auction, a long-awaited decision that risks being appealed, according to Bloomberg.

Ofcom will cap the amount of immediately usable spectrum any one operator can own, which will prevent BT and its EE wireless unit from bidding in the 2.3 gigahertz band. The regulator will also limit how much any carrier can hold of overall spectrum that’s expected to be usable by 2020, affecting both BT and Vodafone.

The regulator, seeking to even out carriers’ airwaves rights and spur competition, announced the rules after the consultations over an initial proposal last November. The frequencies being offered will improve fourth-generation networks and support fifth-generation technologies set for roll-out starting around 2020. Any appeals could delay 5G.

Ofcom is auctioning off 40 megahertz of 2.3 gigahertz spectrum, which is supported by smartphones already on the market, and 150 megahertz of 3.4 gigahertz spectrum, which will be important for 5G. The U.K. is one of Europe’s most imbalanced wireless markets, where the former monopoly BT currently has 42 percent of the immediately usable spectrum after buying EE last year, Ofcom said. Vodafone has 29 percent, CK Hutchison’s Three UK has 15 percent and Telefonica’s U.K. division, O2, has 14 percent.

Ofcom’s limit of 37 percent on any one company’s share of spectrum by 2020 doesn’t go as far as some had wanted. O2, the U.K.’s second-largest mobile carrier after EE, had lobbied the regulator for a maximum of 35 percent. Three UK had called for a cap of 30 percent, which would have forced BT and EE to sell holdings to participate in the auction. Three UK, the most vocal carrier on the matter, argued the auction design allows the larger operators to become more dominant, with its CEO Dave Dyson calling it a “kick in the teeth for all consumers.“

The U.K. regulator expects bidding to begin as early as October, if the rules aren’t appealed like in the past 4G auction. The challenge of that sale of 2.6 GHz spectrum took 14 months to resolve and contributed to holding up the awarding of those rights until 2013, delaying the U.K.’s deployment of 4G networks. The upcoming auction was already delayed by the process to approve BT’s takeover of EE.