[3g-g]

It's looking like Three aren't happy, they're about to spit the dummy, throw their teddy from the pram and other such analogies!

When everyone got their 3G licence they were bound to meet a 80% population target by the end of 2007, Orange are already there, Voda and T-Mobile are at 70%... O2 are dragging their heels at 55%! Nothing we all weren't aware of here at Talk3G!

I think Three's complaint is completely justified, good on them for making sure the others stop dilly dallying.

Read the article here. (http://business.timesonline.co.uk/article/0,,9076-2489342,00.html)


Ofcom is under pressure to force mobile operators, including O2, to spend hundreds of millions of pounds on rolling out their 3G networks after a threat of legal action from 3.

3, which has hit a stringent penetration target set by the Department of Trade and Industry when it issued 3G licences six years ago, is concerned about the regulator’s apparent lenient attitude towards rival players that fail to meet the target.

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In a letter to Ofcom, the Hutchison Whampoa-owned 3, which pioneered the “next- generation” services in the UK, says that failure to ensure full compliance with the target would be “highly discriminatory” against 3.

Failure by Ofcom to act against non-compliance by 3’s rivals would suggest, 3 says, a “breach of a number of Ofcom’s duties” under the terms of the 3G auction and the basis on which 3 invested in the UK.

Though Orange has met the target — of covering 80 per cent of the population with its 3G network — O2’s 3G network covers only about 55 per cent of the population. Vodafone and T-Mobile are just above the 70 per cent mark.

Industry insiders believe that O2 would need to spend hundreds of millions of pounds to meet its coverage requirement — which must be met by the end of 2007. Last night O2 declined to be drawn on costs involved. It is understood to have asked Ofcom to clarify the legality of the 80 per cent target.

In a separate submission to Ofcom, O2 raises the prospect of legal action itself, declaring that it “would be prudent for a reasonable regulator to ensure the obligation is lawful”.

The environment since the 3G licences were issued has changed, it says. It is now clear, for example, that the technology, for which the mobile operators paid a total £22 billion, has not met expectations.

The Spanish-owned group is thought to deem it illogical that it should be obliged to invest in its 3G networks in rural areas where the demand for such services has yet to be proved.

Ed Richards, the head of Ofcom, has insisted that all licence-holders will be forced to meet the 80 per cent target.

However, Ofcom has also indicated that it is unlikely to use its powers to instigate legal proceedings or to revoke licences where operators have not complied. Instead, it said, it will “act reasonably” and “take all relevant considerations into account”. 3 says that Ofcom’s guidance sends “inappropriate signals”.

Ofcom is considering how it will ascertain whether the 80 per cent target has been met.

Ofcom has said that it will start the formal process of assessing compliance with the 80 per cent target towards the end of 2007. A decision on which operators have met the target will be made early in 2008.

For Britain’s mobile operators, the cost of acquiring the licences for 3G technology was just the start. In the 2005 financial year, Vodafone alone spent £5.1 billion on rolling out its 3G infrastructure across its markets.

Although all the operators now offer 3G services, the technology, which promised to revolutionise the way in which consumers used their mobile phones, has failed to live up to the hype that preceded it.

[3GScottishUser]

Setting aside the obvious contractual requirement which is now being examined, 02 appears to be the network that has been gaining most customers in the last couple of years despite its lower penetration of 3G services.

Ofcom will have to take into account consumer attitudes and the reality that the network with least 3G coverage is the UK's most popular and fastest growing. The most important people in the market are customers and they have used their money to cast their verdict on the types of services on offer. This fact cannot be easily dismissed.

Newer technical standards like 900Mhz 3G make the implementation of 2100Mhz totally unviable in rural areas and Ofcom will have to take account of the technology improvements plus the above consumer preferences when assessing this complex issue.

The bootom line is that 3 have totally failed to convince customers to buy 3G and the others have been cautious because they have the alternative proven technology that offers everything that customers appear to want to buy.

Like every other technology issue the regulation has to reflect the pace of change and what was written in 2000 may not be in customers best interests in 2007 and beyond. Hopefully there will be some serious consideration regarding the wisdom of the original coverage targets in light of the market's verdict and a solution applied that satisfies the need for increased growth without companies having to waste millions simply to satisfy an old requirement that has little prospect of satisfying the needs of consumers or returning any profit on investment.

[Ben]

I believe that OFCOM absolutely must uphold the requirement of 80% population coverage as specified in the terms of the 3G licences. 80% population coverage simply isn't that much to ask - there's a massive difference between that and 90%, and a more whopping difference still between that and where GSM coverage is today.

O2 may be stacking up customer numbers right now, but it's not advancing technologically as quickly as the other networks are - for the moment at least. Do we really want to be stuck in the GSM stoneage forever? Rules is rules and every 3G licence holder must complete their rollout for the good of the consumer at large otherwise a thriving market for 3G services is never going to arrive.

Roll on the fines is all I say.

[Hands0n]

Hang on, when the mobile ops went to auction they did so with the full knowledge that they were entering unknown country. I do think that it is completly disingeneous for O2 to now say that they don't believe they should comply with the 80% coverage requirement that they signed up to originally. If a contract of sale term is no longer binding then what is? Can we then go back to O2 mid-contract and say "sorry chum, I don't think I want to be obliged to pay you for the rest of my contract with you for whatever reason"? I'd think we can all safely predict O2's reaction to that. Yet they think and expect to be able to get away with it themselves?

OFCOM should not "be reasonable" at all - they should require and compel O2 and anyone else to uphold their part of the auction deal. Not allow them to squirm out of it.

So O2 say that 3G is "illogical" to deploy 3G in rural areas. Is that not then allowing a complete free-for-all in terms of delivery of services by essential service providers? I mean, why leave it at 3G? Why not allow 2G transmitters to fall into disrepair and eventual demise just to save a few shekels in rural areas. That would be completely "logical" following O2's assertions. It can be no more cost effective to provide 2G than 3G apart from the already sunk costs of the original network.

I think OFCOM should bare its teeth and claws and shred O2 and any of the mobile networks who outright refuse to comply with the terms of the 3G auction, vis a vis provide 80% coverage by 2007.

On 3GSU's point about O2's popularity - I kind of feel that is entirely specious inasmuch as the underlying technology 3G/2G is irrelevant. O2 have not made a big sale on their 2G network by promoting 2G vs 3G - they've done it purely on their packaged product, tariffs, advertising and all the other stuff that they are good at. They also have a strong legacy customer base which is loyal to them - whether that will remain with their current network quality issues remains to be seen. None of that, however, is an excuse for O2 to back off from their 3G auction conditions - they should be obliged to deliver or be fined punitively to discourage any other network following suit.

The mobile network operators cannot and must not be allowed to pick and choose which 3G auction sale terms they wish to adhere to. No more than can we as customers of theirs!

All power to 3 for bringing this action to bear.

Footnote: This household will be eschewing its last O2 contract at the end of this year - we can no longer put up with the poor quality 2G and near-nonexistent 3G footprint of that particular mobile network provider. We are not alone.