Three takes ComReg to court over plans to cap radio spectrum purchase

Three Ireland has initiated court action against the communications regulator ComReg over new licences for radio spectrum, which allows operators to roll out additional services, such as 5G.

The company is unhappy with plans by the regulator to impose caps on how much spectrum individual operators can purchase, in a move to rebalance competition in the market. Three currently has more spectrum than other operators following its €850 million acquisition of O2 from Telefónica in 2014.

The operator claims the format ComReg has decided on is unfair as it places the company at a significant disadvantage to rivals including Vodafone and Eir of between €20 million and €40 million.

However, Three's move has been deemed as "extremely cynical" by other operators who note that its sister company Three UK took the British regulator Ofcom to court in 2017 arguing for the exact opposite measure. It said at the time that a failure to impose limits on spectrum would allow rivals BT, EE and Vodafone to increase their dominance of the local market.

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The regulator meanwhile has said it will oppose the legal challenge by Three Ireland “in full”.

Auction

Three Ireland lodged its action against the auction process format and rules last week and this is listed to commence on Monday next.

“Three regrets having to resort to this process and at all times seeks to engage in constructive dialogue with ComReg with a view to addressing our legitimate concerns while enabling ComReg to meet its statutory objectives,” the company said.

Under competition conditions imposed by the European Commission to allow Three Ireland's acquisition of O2 to proceed in 2014, the operator agreed to provide network capacity and mobile virtual network operator (MVNO) services to allow more companies to offer mobile services by piggybacking on Three's network. However, that move is largely seen as a failure in terms of rebalancing the market.

Three has claimed it has put forward a range of constructive proposals to allow ComReg to achieve its goal of maintaining a fair auction process. This includes offering to sign a legally binding agreement that if it buys spectrum that would bring it in excess of the regulator’s cap, it would dispose of its previous lot to level the playing field.

It has also said it would be happy to oblige with spectrum caps if it were run on similar grounds to the Ofcom auction that ran in Britain in 2017.

Into consideration

In consultation documents, the regulator has dismissed Three’s claims that it is at a disadvantage in the auction process and stated that it is not unfair to take the amount of spectrum the operator already has into consideration.

ComReg announced plans to hold an auction to assign long-term rights of use for 20 years across four radio spectrum bands that are suitable for mobile and wireless broadband services in mid-December.

The award comprises 470 MHz of spectrum rights, which represents a 46 per cent increase in the spectrum assigned for the provision of wireless broadband services locally.

The amount and type of spectrum that operators have the rights to is seen as critical in terms of network coverage, rollout costs and so on. Moreover, some industry insiders say the legal action could set the process to award new licences back by between six and 12 months, at a time when demand for services is at an all-time high due to the Covid crisis.

The awarding of spectrum happens only occasionally and this particular auction involves critical 4G spectrum that has already been awarded in most other European markets.