3 puts the 3G squeeze on Ofcom

Ofcom is coming under pressure from 3 to force some of its competitors to accelerate the rollout of their 3G networks.
 
When the DTI issued 3G licences six years ago, they were conditional on meeting tough targets – covering 80% of the country by the end of 2007. 3 has hit its target, and so has Orange; but T-Mobile and Vodafone are nearer 70%, and O2 is reportedly at about 55%.

Now 3 was written to Ofcom, arguing that a lenient approach to penetration would be “highly discriminatory” and any failure to act against non-compliance would arguably be a “breach of a number of Ofcom’s duties”.

O2 has asked Ofcom to reconsider the status of the 80% target given that the technical and market environments have changed since the 36 licences were granted. O2 is apparently arguing that the 3G technology has not met expectations; and that it would be unreasonable to provide 80% coverage if that includes rural areas with little demand.

Ofcom has said that it will start the formal process of assessing compliance with the 80% target towards the end of 2007 and will report early the following year.

Meanwhile, the European Commission said it has asked Ofcom to reconsider its approach to 3G spectrum costs. The Commission thinks Ofcom’s calculation of wholesale tariffs are keeping termination values higher than necessary because they are based on the inflated prices paid during the 3G spectrum auction.

The commission asked the UK watchdog to ‘reconsider’ the valuations, as Ofcom’s approach may lead to higher consumer prices for consumers.

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