back to article 4G auctions - illegal and immoral?

Both O2 and BT contend that Ofcom's 4G auction proposals amount to illegal subsidy of their competitors, but all the other network operators are curiously silent on the whole thing. The 55 responses which are being shared on the Ofcom site range from The Ramblers, whose letter is generally supportive, to Telefonica's 101 pages …


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  1. Anonymous Coward


    <i>But BT points out that any such coverage requirement means the spectrum wouldn't raise as much at auction, so the buyer would effectively be receiving a state subsidy to pay for rural broadband</i>

    That is one of the most contorted pieces of reasoning I've heard this year. Full marks.

  2. Fluffykins Silver badge

    I still wonder why not a model like UK TV transmission

    One or two companies providing mast infrastructure (Eliminates multiple masts in similar locations) providing transmission servcies to the mobile teleco operators, who could then concentrate on shafting^h^h^h^h^h^h^h serving customers and punting the latest phones.

    1. SImon Hobson Silver badge

      But there is a problem with that ...

      If all the operators used the same infrastructure, then there would be no difference in coverage. No difference in coverage means no incentive to improve it (i.e. fill in gaps) since customers can't leave and go to another operator who does cover where the customer wants to use a phone. So short of having some sort of legal mandate for certain levels of coverage (lets see that get dragged through argument and appeals etc for years), there would be many area that would simply get ignored.

      What I do think would help would be mandatory inter-operator, intra-country roaming. That would make differences more visible because customers could then see when they've roamed onto another network, while at present they just get "no service" and have no idea if any other network has anything better.

      From the operators POV, they'd be paying each other for roamed service and so provide an incentive to improve their own coverage to minimise such payments. Any attempt to stiff the user by charging them more for roamed service would just further highlight their deficiencies.

      But the argument that by making the spectrum less valuable, it's subsidising the competition ... well that's just laughable. Whilst it may mean that operators C & D get to buy some spectrum for less than they could probably afford if bidding openly against A & B, it also means A & B get to pay less as well. So A is complaining that it will be paying less and this amounts to an illegal subsidy of C & D ?

      1. Ru

        Re: But there is a problem with that

        "No difference in coverage means no incentive to improve it (i.e. fill in gaps) since customers can't leave and go to another operator who does cover where the customer wants to use a phone"

        Er, by that argument the only thing a company needs to do is to have coverage as good as their competitors. So all we end up with is redundant coverage of the same areas by multiple providers, but no more incentive to cover other areas that a national infrastructure provider would have.

        But yes, not having some equivalent of traffic peering on mobile basestations and backhaul seems a bit daft. Guess it says something about how awful and intractable their network management systems are, otherwise I'd expect someone to be doing it already...

      2. Anonymous Coward
        Anonymous Coward

        re: make differences more visible because customers could then see ...

        Write an app that tries to connect to all known networks and if it gets IMEI blocked by Telco2, then you at least know that Telco2 has coverage in that area. I don't know if the phone actually gets a blocked message back from the base or not, somehow I doubt it.

        Again, google should have the most accurate map of the ?civilised world?, except for perhaps the KGB.

  3. Alex 0.1


    "But users are already proving reluctant to pay for the additional speed of 3G"

    This is because "additional speed" that's only a bit faster, is often pretty sketchy, and has vast swathes of the country with no coverage at all, isnt a particularly attractive service to pay for.

    As some of the objections hint at, saying "wow our 3g covers 95% of the population" is all well and good, but that 95% is basically cities., which leaves vast swathes of the country (upto and including fairly sizeable towns, not just ass-end-of-nowhere countryside) with no 3G signal - And guess what? The one place I dont particularly need coverage is 1) the city where I live because i'm at/close to home and 2) the city where I live that has wifi hotspots everywhere anyway.

    Superfast mobile net connections are utterly worthless if they cant be used while mobile, which also (funny this) includes outside of cities. Right now, for 3G, that's basically nonexistant. So why is this something networks are suprised people dont fancy paying for?

    "Mobile broadband" to be worthwhile and mobile, whether 3G or 4G, needs a requirement of 95% LAND AREA not where-people-live.

    Personally, I would fairly happily pay what would probably amount to a small fortune for a 3G or 4G service that actually achieved anything remotely close to the speed advertised and would actually always work everywhere, or at least mostly everywhere, instead of here and there, sometimes.

    1. Richard 45
      Thumb Up


      You should try Three. I got their Huawei Mifi dongle a few weeks ago and I'm seriously impressed by the coverage and speed of their 3G/HSDPA network, even in rural mid-Wales. I find their 3G coverage beats Orange's/T-Mobile's 2G. Heck, at the end of May I was sat in a bird hide in the middle of the Dovey estuary and enjoyed a very fast connection, HSDPA if I recall correctly. And that place really IS in the ass-end of nowhere.

      1. leexgx

        three is 3g only no currant 2g network to back it up

        yes but three network only supports 3g or hsdpa, three has no 2g network (apart from 2g roaming onto orange when there is no coverage at all) what stupid it seems three is dismantling some of there network as well (2 farm owners i know had three uk towers and they pull them down resulting in an big hole where three no longer works correctly any more even if there is orange coverage the phone will prefer home network over roaming network soon as it gets an wiff of the home network even if the single is less then 10% that 3g or hsdpa are poor under)

        all that three uk have got going for them is that there data plans are very good when you have got coverage that it (again citys mainly), i know 5 users and 1 company soon as there contract is up they be leaving as they never work where they need it to

  4. Anonymous Coward


    Sorry - 10yrs on and still cannot see the benefits of 3G over EDGE from a corporate point of view. Shoddy coverage and poor performing networks...

    Sorry but we are living in the victorian age compared to other countries.. BB Britain? In your dreams Mr Brown/Cameron etc....

    1. leexgx

      i agree

      2g i find works well for me as well

      just wish orange and t-mobile would upgrade there 2g GPRS network to EDGE (sure its just an software upgrade) as there basic 2g network is rock solid and does not flatten my battery so fast (more so HSDPA does 3g/umts basic seems ok as my htc hd1 works well when i turned off hsdpa option)

  5. Fab De Marco

    Single infrastructure is the way forward

    Recently Orange and T-mobile opened up a sharing scheme and as an Orange customer, I feel it works really well. Masts need to be put up to cover the rural areas that don't get coverage sure, but share and share alike.

    As for no incentive to improve, it needs to be enforced. Look at energy companies, there are hundreds of energy companies across the UK and what seperates them? Price and customer service. I mean electricty from npower is going to make my laptop work just as well as electricity from EON.

    Phone operators need to follow suit.

  6. Anonymous Coward
    Anonymous Coward


    Never mind the 4G auction, I thought the 3G auction was immoral. Incumbent providers feeling obliged to get a licence no matter what the cost ended up paying ridiculous sums, which meant the money left the industry. And we all know who ultimately pays, not the owners but the employees and the customers. Should go back to setting a fair price, and selecting from those who make the best case for being awarded a licence.

  7. Mark 65


    "intriguingly Intel is most adamant in pointing out that one only needs two operators for a competitive market"

    Bullshit. Australia has two main supermarkets controlling 80% of the grocery market. Competitive it ain't.

  8. P. Lee Silver badge

    Isn't it just tax?

    I mean, who is going to pay for the auction... yep, the customers. So we have the government pretending that corporates are paying, when it all actually comes back to the consumers. That's fine, but if more tax revenue is needed, lets be honest about it and raise taxes in a transparent manner.

    This isn't a normal government service, it isn't the nhs which requires that physical things are created and people paid for. This is a license for something which costs nothing. Far better to give the spectrum to those with the best plans for it for free and hold the companies to their plans and perhaps include some requirements to modify their behaviour. You get free spectrum, but you have to be protocol neutral, or provide proper ipv6 with inter-phone capabilities.

  9. cloudgazer

    No it's not just tax

    Suppose the government didn't charge for the frequency just held a 'beauty contest'. That would amount to a multi-billion pound incentive to bribe officials. Are you really so confident that no such thing would be attempted? Then would come the inevitable 'illegal state aid' lawsuits, the entire thing would be a shambles.

    The frequency is a very valuable publicly owned resource. The only way to allocate it fairly and openly is via an auction. However don't expect the 4G auctions to raise nearly as much as the 3G auctions. Later 3G auctions didn't raise nearly as much as the UK one because carriers had adjusted their expectations of future revenue streams.

    The UK consumer didn't end up bearing the cost of those crazy license fees, because networks aren't allowed to raise their prices freely - this is a regulated industry. Instead it was mostly carried by the shareholders who saw a massive loss of equity around that time.

  10. aurizon

    Why not roads and sidewalks?

    The whole concept of spectrum auction is a badly flawed way to tax us all. They all bid the spectrum to a high value, and they then proceed to beat it out of our hides. This is such a good method that we should apply it to roads and sidewalks. Sell them all, but make sure that there are at least 4 buyers of the local roads and sidewalks. That way they can compete. It might be cheaper to jump your back fence and gain access to your back neighbours lower prices roads and sidewalk. Bear in mind, roads and sidewalks will have 2 fees each, one to cross and one to travel along, and there will also be roam fees, requiring all people, children, moggies and doggies to wear transponders to allocate costs. To make it easy, they will send you a bill each month. If you do not pay, you are forbidden to travel, unless someone carries you on his back....

    Sound silly? That is what we have now with telecoms.

    There must be a better way

  11. Michael

    Lease the frequency

    Why can't the government just lease the frequency for say 5 year periods with the current holder guaranteed the lease again so long as they meet minimum requirements?

    Place minimum requirements on operators for usage of the spectrum, and coverage, with the requirements becoming more stringent over time. This enables operators to build up nation wide coverage over time, ensures people don't hold on to spectrum they aren't using and reduces the one off cost to operators. Longer term, they may pay the government as much, or more for the spectrum.

  12. James @ Joju

    Share one network

    It's perfectly possible for several operators to share one physical network in a competitive manner, and it would use a lot less energy.

    The procurement of the network could also be competitive.

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