UK COMMUNICATIONS REGULATOR Ofcom has announced that it will delay the planned auction of 2.3GHz and 3.4GHz spectrum following the threat of legal action from O2 and Three.
Ofcom announced plans in November last year to auction off the 2.3GHz and 3.4GHz spectrums, which are currently being used by the Ministry of Defence and are suitable for providing "very high data capacity", in early 2016 in a bid to meet the growing demand for 4G LTE.
News of this didn't go down well with Telefónica UK, owner of O2, and Hutchison 3G, owner of Three, which both wrote to Ofcom saying that they would seek a judicial review if the regulator pressed ahead with the spectrum auction before the European Commission (EC) had ruled on whether they could merge.
Ofcom has bowed to the operators' demands, and has said that the spectrum auction will take place after the EC's final decision on O2 and Three's planned merger, expected in mid-May.
"After careful consideration, given these specific circumstances, we have decided for reasons of good public administration to delay commencing the auction process," Ofcom said in a statement.
"Therefore, Ofcom will not now commence the auction process until the EC has taken its decision as to whether the proposed merger between Telefónica UK and Hutchison 3G UK is compatible with the common market."
O2 is pleased about this, saying in a statement sent to The Telegraph: "We welcome Ofcom’s decision to delay commencing the auction process until the EC has made its decision on the proposed merger between Telefonica UK and CK Hutchison.
"Proceeding with a major spectrum award immediately before the conclusion of two significant competition investigations would have created uncertainty in spectrum valuation.
"This would have risked an inefficient auction outcome that could have harmed competition, increased costs and prevented best use of the spectrum, ultimately leading to disadvantages for customers."
A Three spokesman added: "We welcome Ofcom's decision to delay the auction of spectrum in the 2.3GHz and 3.4GHz bands."
Ofcom is also awaiting the Competition and Markets Authority’s decision on the separate merger between BT and EE, which is expected in January.
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