UK mobile operator O2 has opposed Ofcom's spectrum plan for a 4G LTE spectrum auction. We believe that the proposed spectrum floors are a state aid and are therefore illegal under EU law, O2 said in a press release.

Company welcomed the auction and said

We welcome Ofcom’s proposal for the spectrum auction and agree with many of their key points. We support the Combinatorial Clock Auction structure which prevents strategic bidding, i.e. where bidders acquire spectrum to prevent someone else from getting it. We also support the proposed spectrum caps which will safeguard consumer interest and prevent any one bidder acquiring a dominant position in these scarce resources.

However as per O2, the spectrum floors would distort the auction process, allowing all bidders, except Vodafone and O2, to potentially acquire spectrum at discounted prices. Ofcom’s own figures suggest this effect could cost taxpayers £1bn. The proposed floors, and the argument that Vodafone and ourselves already have enough sub-1GHz spectrum, are based on the mistaken belief that 800 MHz and 900 MHz are directly comparable spectrums. They are not. Our response to Ofcom clearly explains why.

Ofcom has denied this charge and told The INQUIRER that it is fully aware of state aid rules and would not have made proposals that it considered illegal.