H3G UK’s rumoured network upgrade to allow for legal action over 4G auction rules?

27 Mar 2012

David Dyson, the CEO of Hutchison 3G UK (H3G UK), Britain’s smallest mobile network operator by subscribers, is expected to today reveal a network upgrade aimed at increasing capacity. According to British broadsheet The Guardian, H3G UK, which offers services under the ‘3’ banner, is thought to have already begun a technology upgrade, introducing Dual Carrier HSPA+ (DC-HSPA+) to its existing infrastructure along the M3 corridor from Twickenham in London to Camberley in Surrey, prior to a national rollout.

Alongside the benefits to its customers, a more notable development that may be forthcoming as a result of the upgrade is that H3G UK may now seek to initiate legal action against local telecoms regulator Ofcom regarding its planned 4G spectrum auction. The fourth-placed player is thought to have concerns that the current frequency sale proposals do not do enough to safeguard its future, but prior to the rumoured network upgrade it had been suggested that the cellco’s lack of capacity meant that it was more important to it that the auction move ahead swiftly. In light of the network improvements, however, legal action may now be a viable option in a move which could derail the already-delayed sale process for fourth-generation spectrum in the UK.

Commenting on the rumoured developments, the report cites a H3G UK spokesman as suggesting that Mr Dyson’s speech will update the operator’s public position regarding the auction plans, noting: ‘You can expect it to address competition and the principles set out by Ofcom in a four-player market for the benefit of consumers.’

The terms for the sale of 4G spectrum are expected to be finalised in July 2012, with Ofcom preparing to offer frequencies in both the 800MHz and 2600MHz bands. Under previously outlined proposals, the UK’s three largest cellcos – Everything Everywhere, O2 UK and Vodafone UK – will compete on a level playing field in the sale process, while one block of spectrum will be reserved for a fourth operator, although this will not necessarily be in the in-demand 800MHz band. H3G UK, meanwhile, is understood to be pushing for the regulator to guarantee that at least some spectrum in the 800MHz band – which offers wider outdoor and better indoor coverage – will be available, arguing that without it its business will not be viable.

Rival operators such as Vodafone UK have argued, however, against special treatment for H3G UK, with a spokesperson for the former last week stating: ‘We still do not believe … the case has been made for reserving any spectrum … for 3. Ofcom should stop trying to over-engineer the release of new spectrum to run the next generation of mobile internet services, and simply run a fair and open auction as soon as possible. That will ensure the speedy rollout of 4G services, which will be to everyone’s benefit.’

United Kingdom, Hutchison 3G UK (Three UK), Ofcom