The UK’s smallest network operator, Three, seems more poorly named by the day. Lately, the forth-largest provider is lucky to be in the race at all.
Last week the provider formally complained to the European Commission that a mobile commerce deal between its rivals was anti-competitive. Earlier in the week, the company had expressed a similar sentiment in response to a delay in Ofcom’s auction of the UK’s 4G spectrum. The charge of shutting down competition is a critical one in the UK market where just three providers - Everything Everywhere, Telefonica-owned O2 and Vodafone – take up 90% of the market.
Three is owned by Hutchinson so it hardly lacks expertise or financial clout yet, seven years after coming to the UK, the network is still very much the underdog. That reputation doesn’t seem to be proving a problem at the moment., however Three are attracting smartphone users in their droves by offering far higher data allowances than their rivals. Despite signing up with Apple later than its rivals, the provider now sells 30% of all new iPhones.
But there’s a flip-side. It’s those same high data usage consumers that would be willing to leave if the provider is locked out of participation in m-commerce or, worse, fails to get a fair shot at offering 4G. The provider's exclusion is most explicit in the case of the mobile commerce deal. In June, the three big networks announced that they’d be working together on two major mobile revenue streams: payment systems and advertising.
"The planned and explicit exclusion of Three from the proposed UK m-commerce joint venture is designed to weaken Three's ability to be a competitive force in the UK,” said Three's regulatory affairs director, Stephen Lerner. Other providers counter that Three is not big enough to count on the issue and will, in any case, be able to take advantage of m-commerce devices at their release. Cold comfort in a business with so much staked on technological, and monetizing, innovation.
Announcing that the UK’s 4G spectrum would be auctioned off, the communications regulator, Ofcom, said that the auction was, "critical to the future of the UK mobile telecommunications market… [and] of significant importance to the wider economy." Now that critical auction has been delayed. Instead of taking place in early 2012, as planned, the sell-off has been set back to mid 2013. The auction is just as critical to the survival of Three which was significantly disadvantaged earlier in the year by the regulator’s decision to dole out extra 2G spectrum for 3G use.
The re-use of 2G primarily benefited O2 and Vodafone, leaving Three and Everything Everywhere at somewhat of a disadvantage. Ofcom deny that the new auction date is a significant departure. Earlier this week, they described the 2012 deadline as “always ambitious” and pointed out that the change leaves the rollout date for 4G services unchanged. In theory, then, consumers aren’t losing out on anything. That theory only holds as long as Ofcom hold the reigns on their spectrum auction, though, and, right now, that’s in doubt.
Telefonica-owned O2 have taken concerns about the regulator ‘s handling of the auction to the ever-busy office of the EU’s competition commission. Their reasoning is comically opposed to Three’s concerns: O2 argue that restricting the amount of spectrum any one company can buy constitutes a state aid. If the EU agree, it’ll be more difficult than ever for Three to get a foothold in the market and the network's boom in users seems to suggest that the UK would be much poorer for that.
Julia Kukiewicz edits consumer site, Choose, which covers the cheapest broadband as well as premium deals such as BT Infinity.