- Spectrum is used by mobile phone operators to provide 3G and 4G internet services to customers. It is auctioned to mobile operators on an exclusive basis.
- In 2008, spectrum holdings of mobile operators were roughly equal. But the last 4G auction, along with the merger of BT and EE, now leaves BT with a dominant 45% of the spectrum market.
- Growing asymmetry in the spectrum market has been accompanied with higher costs for customers. The cost of average mobile contracts grew by 13% from 2014 to 2015.
- There are concerns that further moves towards an unbalanced spectrum market would be bad for competition. Ofcom is right to propose that BT cannot increase its spectrum share for 4G services.
- BT already has a disproportionate influence in the broadband industry where its rivals are often forced to use its infrastructure, leading to problems with a conflict of interest.
- BT could further dominate the mobile industry without restrictions on the 5G compatible spectrum auction. Ofcom must prioritise action in this area.
DISCLAIMER: The views set out in the ‘Economic Bulletin’ are those of the individual authors only and should not be taken to represent a corporate view of the Centre for Policy Studies
Daniel Mahoney - Friday 17th February 2017