O2 faces £40m fine over 3G delays

LONDON - Mobile phone operator O2 has been given four months to complete the roll-out of its 3G network to communications regulator Ofcom's satisfaction.

Ofcom announced today that, while four of the five licensees have complied with rules requiring their 3G networks to cover 80 per cent of the population by 31 December 2007, O2's network only covers 75.7 per cent of the population.

When Ofcom auctioned 3G licenses to five mobile networks in 2000, the platform was tipped to become a major new outlet for broadcasters and advertisers. O2 paid £4.03bn for its 3G license.

But with 3G handset technology failing to develop as expected, and consumer take-up of the technology lagging behind expectations, broadcasters have yet to generate significant revenues from services such as mobile TV. Consequently, mobile has yet to become a major advertising platform.

Ofcom warned O2 that if it does not meet the roll-out obligation by the end of June, then it will shorten the term of its 3G licence by four months.

Should that happen, then the mobile phone operator will face a potential £40m fine from the regulator.

An O2 spokesperson said the company is confident that it will meet Ofcom's requirement before June.

“O2’s strategy has been to roll out our 3G network in areas where there is the most demand, providing high quality, in-building coverage in those areas.  We have rolled out our 3G network to over 75% of the population. Where we do have coverage it has consistently provided the best quality. We also have one of the larger 3G customer bases.”

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