3UK Kevin Russell has called for caps in next year's spectrum auction

The UK’s smallest operator, 3UK, is urging national regulator Ofcom to impose caps on spectrum allocation below 1GHz of bandwidth in order to prevent it from being squeezed out of the market.

In an interview with the Financial Times, CEO Kevin Russell said that 3 UK ran the risk of being pushed out of the market if it was unable to secure LTE spectrum in next year’s auction. The auction, due to be held in the first quarter of 2012, will be for 800MHz and 2.6GHz. With 3’s largest rivals Vodafone and O2 already owning 900MHZ of bandwidth, the smaller operator is calling for a cap similar to that imposed by German regulator Bundesnetzagentur during its auction last year.

Russell told the FT that “there is a risk of a strategic premium being bid to squeeze 3 out of the marketplace. If 3 is blocked out of spectrum…there will be consolidation in the marketplace.” Earlier this year, Russell criticised Ofcom’s decision to allow competitors to reallocate spectrum from basic 2G services to 3G offerings.

3UK recently bucked mobile data pricing trends with the announcement that it would continue to offer unlimited data plans to prepaid users, starting at £15 a month. Globally, almost all the major operators have moved away from all-you-can-eat offerings in search of new billing models designed to cope with a significant surge in mobile data uptake.

With a small subscriber base, 3UK has the capacity to spare, while its competitors are dealing with congestion issues that are, in some cases, very serious. The larger carriers have argued forcefully that unlimited data use is economically unsustainable but 3UK appears to have no such concerns. With the UK market looking like its settling into a three-way fight between the bigger players, how easy it will be for 3UK to keep a toehold remains to be seen.

The seventh annual LTE World Summit takes place in Amsterdam on 17th – 18th May.

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