Three and Vodafone battle it out over 4G spectrum

Mobile operators gear up for auction in 2012

Mobile operators Three and Vodafone battled it out yesterday at a Westminster eForum over the upcoming 4G spectrum auction in 2012.

As the smallest mobile network, Three fears being squashed out of the market if Ofcom does not cap the amount of frequency that a single operator can buy.

"The amount of spectrum you have will largely define your market share. As a result, Three is well and truly on the back foot in terms of where we sit in the marketplace," said Kevin Russell, chief executive of Three.

"We are going up against the biggest operators. Maybe we will get squeezed out," he added.

Russell pointed out that the government will have a conflict of interest if it implements a cap – the higher the price that is paid for the spectrum, the more the Treasury will receive.

"Mobile plays a fundamental role in the broadband evolution in this country, and also in its economic growth. Competition also has fundamental benefits for consumers. I think it is incredibly dangerous to trade all of that off for a short-term cheque that makes you feel good," he said.

But Vodafone disagreed with Three's argument, suggesting that even though Three has less spectrum than the other operators, this does not negatively affect the company because it also has fewer customers.

"I did a calculation to work out the number of Mhz per million customers that each of the operators in the UK has," said David Rodman, head of regulatory affairs at Vodafone.

"At the bottom of the pack is O2 with 1.5Mhz per million customers, Vodafone has 1.9Mhz, Everything Everywhere is at 2.3Mhz, and at the top of the pack is Three with 2.5Mhz," he added.

"So you might say that relative to the number of customers they have, Three is quite flush with available spectrum."

Russell hit back at Rodman, arguing that Vodafone and the other operators are using these figures as an excuse to keep mobile market share at its current position.

"What Rodman is really saying is that he would actually like market share to continue as it stands today. The whole point of competition is for the new entrant to gain market share," said Russell.