4G Policy Diverging in U.K., U.S. Markets?

Regulatory policies in different nations and regions often take different directions. Right now, U.K. policy for fourth-generation networks and U.S. policy might be headed in different directions. Preparing to auction off new spectrum, Ofcom, the U.K. regulator, has established a framework where four national operators will be allowed to acquire spectrum, the thinking being that the top-four existing 3G providers also each will win spectrum to support 4G.

In the United States, policymakers have to grapple with the immediate issue of a reduction in leading national wireless providers from four to three, if AT&T is allowed to complete its merger with T-Mobile USA. Verizon Wireless has said it is not interested in buying Sprint, but industry analysts are not convinced the market will not boil down to a two-player national market, sooner or later.

Of course, there can be no assurances the number of contestants in the United Kingdom will not consolidate as well, at some point. But the The 4G auction is not expected to be the driver for any such consolidation.

If fact, Ofcom's spectrum auction will be explicitly designed to maintain the existing competitive landscape. There are provisions for regional providesrs to acquire a pair of 10MHz bands at 2.6GHz.

The auction, in principle, could have been designed in other ways. Where regulators want to encourage more entrants, policies can be designed to prevent existing market leaders from acquiring too much spectrum. In other cases they can simply be barred from bidding. In this case, the spectrum auction is designed to maintain the status quo of four national providers.

The U.S. market might  be headed the other way, towards a consolidation many have expected to see. AT&T obviously argues the move is "pro--consumer." Doubtless many will discount that claim. The big issue that now may develop is whether the broadband mobile ecosystem is developing so robustly that value, revenue and innovation are, in fact, moving away from the mobile service providers, and into the hands of other ecosystem partners, including device, application and platform providers.

If so, the issue of how many national access providers can exist will  become less important.