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Mobile operator claims watchdog is afraid of being sued if it takes on the big telcos.
3UK is not confident that Ofcom will implement the measures that it thinks are necessary to protect and improve competition in the U.K. telco sector.
The country’s smallest mobile operator by subscribers is currently lobbying the regulator to impose a 30% cap on the volume of available spectrum that any single player can own. This week, 3UK also joined the ‘Fix Britain’s Internet’ campaign, which is calling on Ofcom to force a full separation of BT and its infrastructure arm Openreach.
Stephen Lerner, 3UK’s general counsel and director of regulatory affairs, told Total Telecom this week that Ofcom needs to stand up to big players like BT and Vodafone, but that he has "very little confidence" that Ofcom will actually do it.
"Ofcom has a long history of not being bold and of making decisions in favour of the big players," Lerner claimed.
He explained that at the upcoming spectrum auction, expected to take place in late Q1 or early Q2 2017, Ofcom’s current proposal calls for a cap of 37% on the amount of available mobile spectrum that any single operator can own.
Lerner warned that a cap of 37% would still allow the likes of BT and Vodafone – which between them control more than two thirds of the country’s currently allocated mobile spectrum – to hoover up all the frequencies due to go under the hammer next year, simply to stop 3UK from winning any frequencies for itself, should they so desire.
"If Ofcom want a four-player [mobile] market then they need to essentially get a bit more active," Lerner said, by imposing a cap of 30% instead.
In response, Ofcom told Total Telecom that it, as well as the industry, will soon have a better idea of how the auction design is taking shape.
"We plan to publish a consultation in the autumn, which will set out our plans for the 2.3-GHz-3.4-GHz spectrum award," said a spokesman for the regulator.
3UK this week also joined the Fix Britain’s Internet campaign, which is backed by Sky, TalkTalk, Vodafone, and the Federation of Communication Services (FCS), and calls for Ofcom to force a full structural separation of BT and its infrastructure arm Openreach. So far, 75,000 U.K. consumers have supported the campaign.
Under the current regulatory structure, Openreach is functionally separated from BT, meaning that it must give equal treatment to all telcos, and not favour its parent.
However, Ofcom’s recent market review concluded that Openreach still has the means and incentive to favour BT. The regulator recently proposed several measures to make Openreach more independent from BT, but stopped short of recommending a full split.
"The model that Ofcom put in place has not worked. The only resolution is structural separation," Lerner said.
A spokesman for the watchdog insisted that its reforms "are incredibly bold," and represent the biggest shake-up of Openreach’s structure in a decade.
The proposals include making Openreach a legally-separate entity within BT, with its own board and articles of association. It would also be able to engage in private discussions with BT’s rivals.
Ofcom’s spokesman warned that pushing ahead with a full split would risk "significant disruption and drive up costs" for the industry, and by extension, consumers.
Lerner has another theory though.
"Ofcom is concerned about being litigated. Big operators have endless resource to throw at them in terms of legal challenges," he said.
Part of the reason for Ofcom’s alleged timidity, Lerner claimed, is due to the fact that the standard of appeal regarding Ofcom decisions is lower compared to regulators in other industries.
In the energy or financial sectors, for example, the regulator’s decision can only be overturned if a judicial review finds that it was unlawful. In the case of Ofcom though, decisions can be appealed on the grounds of whether the party lodging said appeal thinks the decision is correct.
The situation could change though: the standard of appeal for Ofcom is currently being reviewed as part of the Digital Economy Bill.
The legislation has only had its first reading, so "we’re a ways away on that," Lerner said, adding that "we’re quietly confident" the standard of appeal will be raised.
"It’s nice to see the government doing something," Lerner said.
On this point at least, Ofcom and 3UK are in complete agreement.
"We support that reform," Ofcom’s spokesman said. "We want to focus on making communications better for consumers and businesses, rather than on litigation."
