Telecoms companies BT and O2 have objected to UK telecom authority Ofcom’s 4G auction plans, accusing it of offering rival mobile operators £1bn of "illegal state aid".
Telefonica SA’s UK arm O2 said that next year’s auction of mobile spectrum does not encourage healthy competition, as some of the current proposals amount to state aid.
Ofcom had revealed its plans for the auction of 4G mobile spectrum in March this year. To ensure healthy competition, the telecom watchdog had placed limits on the minimum and maximum amounts of spectrum that bidders can be awarded.
Now O2 says that Ofcom’s proposals to ensure minimum "spectrum floors" for all four of Britain’s operators will artificially reduce the auction prices. The move could cause a loss of £1bn to the exchequer, it says.
O2 said, "We believe that the proposed spectrum floors are a state aid and are therefore illegal under European Union law. The spectrum floors would distort the auction process, allowing all bidders bar Vodafone and O2 to potentially acquire spectrum at discounted prices."
BT has also raised concerns over Ofcom’s proposals.
"BT is doubtful whether this approach will be sufficient, not least because such an outcome cannot be guaranteed," it said.
Ofcom received 55 responses to its proposals. The response to Ofcom’s consultation is awaited from Vodafone, Three UK and Everything Everywhere.
