Everything Everywhere should not profit from spectrum sale, say MPs

Mobile operator Everything Everywhere (EE) should not be allowed to enjoy a windfall profit from the sale of its 1800MHz spectrum, according to a Commons culture, media and sport committee report released today.

In 2010 the European Commission agreed that Orange and T-Mobile could merge to create EE with the proviso that it sell 25 per cent of its 1800MHz spectrum, in order to comply with competition law.

EE has to make the sale before the upcoming 4G spectrum auction, which is expected to take place in the final quarter of 2012.

The report from the Commons Culture, Media and Sport Committee argues that some of the profit EE makes from such a sale should be reinvested back in the network, as the spectrum was originally given to it for free.

"The sale by Everything Everywhere of some of its spectrum allows a private company to profit substantially from the sale of a public asset," the report states.

"We acknowledge that unless companies can profit from the sale of their spectrum, there is no incentive for them to divest any of their holdings.

"However, we recommend that the government and Ofcom investigate mechanisms by which a proportion of the proceeds of any sale could be used to the benefit of consumers.

"For example, Ofcom should explore whether it could compel Everything Everywhere to ring-fence a proportion of this windfall for investment in its network."

Although EE has paid an estimated £160m in licence fees for the 1800MHz spectrum since it acquired it in 1991, the initial deal involved no outlay on the part of the carriers, so EE stands to make a significant profit on the sale.