3 calls on Ofcom to cap 4G spectrum buying

Operator is worried about being squeezed out of the market

The UK's smallest network operator, 3, says it risks being pushed out the market if a price cap is not imposed on the spectrum to be sold of next year for 4G networks.

"There is a risk of a strategic premium being bid that will squeeze 3 out of the marketplace," said Kevin Russell, chief executive of 3 in conversation with the Financial Times.

"If 3 is blocked out of spectrum in the auction process, there will be consolidation in the marketplace."

Addressing this problem might be difficult for a government that wants to make as much money from the auction as possible, although it is in the government's interests to maintain an effective level of competition.

Russell is calling on telecoms regulator Ofcom to impose a cap on how much any one mobile operator can buy below the 1GHz bandwidth.

800MHz and 2.6GHz bandwidths are being auctioned for 4G networks.

If 3 does not secure enough spectrum as a result of the high prices being paid, it could find itself worse off than its competitors.

The UK currently has four network operators, and if this were to drop to three, then consumer groups would be expected to express serious concern.

Although such countries as the US and Japan have already started using 4G networks, the UK auction is not expected until the first quarter of 2012, and the spectrum is unlikely to be used until 2013.