Ofcom has published1 the first in a series of
consultations long-awaited by the industry on the forthcoming
auction (Auction) of mobile spectrum in the UK (Consultation),
which has as its aim an assessment of future competition in the
mobile services market and its proposals on the award of the 800
MHz and 2.6 GHz spectrum (New Spectrum).
Access to the New Spectrum is vital to the commercial
success of existing and new entrant mobile operators.
The four UK mobile operators: Everything Everywhere; O2; Vodafone;
and Hutchison 3G (3), are the key stakeholders in the outcome of
the Consultation, each struggling to cope with the vast increase in
UK consumer demand for mobile data. 3 was particularly concerned
following Ofcom's decision in January 2011 to allow operators
to offer 3G services using their spectrum previously licensed for
2G services only (3 having invested heavily – and
exclusively – in the 3G spectrum auction in 2000 (3G
Auction). Other parties with a vested interest in the Consultation
outcome include the emergency services and Program Making and
Special Events (PMSE) users, who currently operate in or adjacent
to the New Spectrum. The London Organising Committee for the
Olympic Games and Paralympic Games (LOCOG) has expressed the
importance of the New Spectrum for the use of wireless cameras
during the Olympic Games (see below).
The Auction is the largest ever in the UK, equivalent to three
quarters of mobile spectrum in use today. It is 80% larger than the
3G Auction which raised £22.5 billion for the UK Government.
The New Spectrum will be used by mobile operators to deliver 4G
mobile technologies such as Long-Term Evolution (LTE) and Worldwide
Interoperability for Microwave Access Technology (WiMAX) but is
likely to raise far smaller revenues than the 3G auction.
The New Spectrum comes from two sources: the lower-frequency 800
MHz and (part of the digital dividend from the switch from
analogue to digital TV in the UK and well-suited to providing
wide coverage, which will benefit rural areas); and the
higher-frequency 2.6 GHz band (currently used for PMSE and
well-suited for delivering high capacity and high speeds to urban
areas).
Competition
At the heart of the Consultation is the issue of competition in
the market for the provision of mobile communications services. The
Consultation considers the likely evolution of the market and
highlights the importance of safeguarding the efficient use of
mobile spectrum (taking into account the current distribution of
spectrum between the four UK mobile operators). In particular,
Ofcom attaches value to the sub-1GHz spectrum for operators to be
able to offer higher quality data services, particularly
indoors.
Overall, Ofcom identifies a material risk that only two or three
mobile operators capable of providing higher-quality data services
in a profitable way may emerge from the Auction, and plans to
restrict the nature of the Auction to allay this risk by way of
'spectrum flows' and 'spectrum caps'. Spectrum
flows will operate to ensure that there are a minimum number of
licensees, each with a minimum amount of spectrum, and spectrum
caps will operate to calculate the amount the spectrum licensee can
hold.
Ofcom considers that the market will likely evolve in three
areas:
(1) high quality data with reliable annual coverage;
(2) a separate market with higher data speeds and better latency
(delivered by LTE) which is distinct from the market associated
with lower data speeds (delivered by 2G and 3G);
(3) priority of service markets; for example, highly reliable
business services versus standard consumer services.
Services existing in and adjacent to the New
Spectrum
Ofcom has previously identified the potential for
interference to networks already operating adjacent to or near the
New Spectrum2 and this is considered in the
Consultation. It plans to publish a separate consultation in
the next few months, addressing the issue and potential
restrictions in more detail.
In relation to emergency services (whose systems currently operate
around the 800 MHz band), Ofcom has been working with the Home
Office and the Department for Communities and Local Government to
assess the risk and plan for mitigation against interference.
Ofcom proposes that the Government will meet any justifiable costs
that emergency services incur as a result of any such mitigation.
The need to avoid disruption to the operation of emergency services
at the Olympic Games between June and September 2012 is a key
consideration for Ofcom.
In relation to cable TV systems (which, although not wireless,
operate near the 800 MHz band and are susceptible to interference),
Ofcom worked with the Department for Business, Innovation and
Skills (BIS), Virgin Media and technical consultants during 2010 to
assess the scale of potential interference. The main
conclusions were that the potential impact is manageable and that
there is time to contend with the issue. Virgin Media and
other cable operators will be encouraged to review their frequency
plans and replace hardware where necessary before mid-2013.
They are also advised to make an effort to educate their customers
on how to avoid interference.
The use of the 2.6 GHz band by mobile operators will likely
interfere with radar, which commonly operates in the 2.7 to 3.1 GHz
band. Ofcom proposes that mobile network operators in the 2.6
GHz band will need to coordinate with radar operators, and radar
operators will likely be required to modify and upgrade their
equipment. Ofcom has advised air traffic control radar
operators of the likely impact and proposes to amend Wireless
Telegraphy Act3 licences to ensure that necessary
modifications are made to mitigate potential interference due to
mobile operators operating in the 2.6 GHz band.
In respect of the Olympic Games, Ofcom has elected to reserve the
whole 2.6 GHz band for wireless cameras between 28 June and 23
September 2012. The result will be that licences issued in
the Auction to mobile operators for the 2.6 GHz band may
temporarily exclude use for operating new services, depending on
demand at the time of the Olympic Games.
At present, the 2.6 GHz band is currently licensed for PMSE
use. Ofcom proposes that access to these frequencies for PMSE
will cease with three months' notice, which will begin on the
date of the announcement of the provisional application date to
participate in the Auction. Ofcom is also considering allocating
part of the currently unassigned 3.1 GHz band to PMSE on a
temporary basis.
New Spectrum Licences
Ofcom has proposed that licences in the New Spectrum shall have
an indefinite duration, subject to revocation. It considers that
such a structure would promote optimal use of the spectrum as a
whole and promote competition. To provide certainty, Ofcom
has proposed that during an initial term of twenty years, New
Spectrum licences could only be revoked for very limited reasons,
such as non-payment of the relevant licence fee and national
security. After the initial term, additional licence fees would be
payable and the licence subject to revocation on spectrum
management grounds on five years' notice.
Licences will be subject to a condition of extension of coverage to
95% of the UK population.
The deadline for responses to the consultation is 31 May
2011. The Auction is timetabled for the first quarter of 2012
and Ofcom's anticipated start date for granting licences in the
New Spectrum is 1 January 2013.
Footnotes
1. Consultation published on 22 March 2011, click
here. The announcement is pursuant to the direction to Ofcom by
the UK Government in December 2010 (Wireless Telegraphy Act
2006 (Directions to Ofcom) Order 2010 (click here),
click here. for Law-Now article. This follows previous
consultations in 2008, 2007 and 2006 through which Ofcom developed
and refined proposals for the award and the technical and
non-technical licence conditions and award rules.
2. Click here for statement
3. Wireless Telegraphy Act 2006, click here.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 06/04/2011.
