In its new report the Commons Culture Media and Sport Committee says that overall Ofcom has been doing a good job facilitating the next spectrum auction despite the lack of co-operation from the mobile network operators.
The committee believes that, on the whole, Ofcom has handled a contentious and commercially sensitive process well. It agrees in principle with the rules and conditions that Ofcom has laid out for the auction.
Ofcom proposes that one of the spectrum licences should have a condition of providing mobile internet coverage to least 95% of the population. The committee says that Ofcom should go further to hasten the rollout of broadband and agrees with a unanimous decision made by the House that the coverage obligation for this licence should be set at 98%. It also argues that Ofcom should consider applying this obligation to more than one licence.
The committee is concerned that the sale by Everything Everywhere of some of its spectrum will result in the company making a substantial profit from a public asset that was granted to it for free. It says the Government and Ofcom should look into mechanisms to ensure that at least a significant proportion of the proceeds be used to benefit consumers.
The committee examined the issue of some operators using their allocated second generation (2G) bandwidth for third generation (3G) mobile services, and concludes that this liberalisation has not permanently distorted the market in favour of those licence holders. The committee agrees that Ofcom's proposals to implement spectrum caps and floors at the auction is the best viable option to ensure competition in the spectrum market place.
The committee argues that it is vital that spectrum users other than mobile service providers are not overlooked by policy makers and regulators. It recommends that Ofcom's remit is widened in order that the interests of British businesses - whose spectrum use plays an important part in the UK economy - are best served.
Comments from the Chair
John Whittingdale MP, Chair of the Committee, said:
"Ofcom has had a very difficult job adjudicating between competing and polarised interests, and we are concerned that constant disagreement and special pleading from the four mobile network operators appears to have further delayed the spectrum auction. We believe that the basic rules for the auction which Ofcom has laid down are sensible and fair, and that further delays will result in the UK falling further behind in this vital area. The auction needs to proceed as soon as possible.
Where a mobile provider is set to gain a windfall from the sale of what was originally a public asset, Government and Ofcom should find a way to ensure that at least some of the proceeds are invested for public benefit.
Access to fast broadband services will become increasingly important in the future and those without coverage, particularly in rural areas, will be left at a disadvantage. We believe that Ofcom needs to go further than it currently proposes by setting a condition that at least one of the new licence holders must achieve 98 per cent coverage across the country."