(Reuters) - A British plan to limit the amount of spectrum the biggest mobile operators can win at an upcoming auction earned a stinging rebuke on Tuesday from the smallest provider Three for not going far enough, raising the prospect of more delays for the industry.
Setting out plans for spectrum needed to increase internet speeds, communications regulator Ofcom said it would cap the amount that could be won by market leader BT/EE (BT.L) and by Vodafone (VOD.L) in a bid to maintain competition in the sector.
However Three, owned by Hong Kong's CK Hutchison Holdings (0001.HK), said the proposals needed to go further and it would consider its response as a matter of urgency.
The company, the fourth biggest provider in Britain, had previously threatened legal action over the auction plans, echoing a dispute that delayed the auction for 4G services in recent years.
"Ofcom's proposal is a kick in the teeth for all consumers," said Dave Dyson, Chief Executive of Three UK.
"By making decisions that increase the dominance of the largest operators, Ofcom is damaging competition, restricting choice and pushing prices up for the very consumers that it is meant to protect."
In its proposals Ofcom said it would hold an auction later this year to offer 190 MHz of spectrum in two bands, increasing the airwaves available for mobile devices by almost one third.
The first offer of 40 MHz in the 2.3 GHZ band will be usable immediately while the second offer of 150 MHz in the 3.4 GHz band is expected to be used by future devices running on a 5G network when that is available.
Ofcom said under its plans no mobile operator would be allowed to own more than 37 percent of all the mobile spectrum expected to be usable in 2020, capping how much the biggest spectrum owners such as BT and Vodafone can win in the upcoming auction.
Ofcom believes these restrictions will free up the other two providers, Three and Telefonica's (TEF.MC) O2, to snap up spectrum, but Three said the proposals did not go far enough.
BT/EE currently owns 42 percent of immediately usable spectrum, while Vodafone owns 29 percent, O2 has 14 percent and Three owns 15 percent.
Mark Evans, CEO of Telefonica UK, said Ofcom's plan fell short of its expectations but it urged the industry to now press ahead with the auction. Vodafone and EE also said they looked forward to being able to move on and develop their networks.
"Spectrum is a vital resource that fuels the UK's economy," Philip Marnick, Ofcom's Spectrum Group Director, said. "We've designed this auction to ensure that people and businesses continue to benefit from strong competition for mobile services."
Reporting and writing by Kate Holton; additional reporting by Sanjeeban Sarkar in Bengaluru; Editing by Gopakumar Warrier and David Evans