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UPD Ofcom Details UK Auction of 800MHz and 2.6GHz Mobile Broadband Spectrum

Posted: 22nd Mar, 2011 By: MarkJ
uk lte 3g 4g ofcom mobile broadbandofcom ukThe UK communications regulator, Ofcom, has this morning announced the launch of its first primary consultation on the long awaited auction of 800MHz and 2.6GHz radio spectrum (i.e. 250MHz of additional mobile spectrum), which will be used by Mobile Network Operators (MNO) to deploy the next generation (4G) of faster Mobile Broadband services (e.g. LTE - Long Term Evolution or WiMAX technology).

Ofcom said that it wants "the benefits of 4G services to be available as soon as possible" and has therefore aimed to start the auction in Q1-2012, subject to today's consultation. This is in keeping with the original timetable that was first announced last year (here), albeit one month behind schedule.

The 800MHz band (790-862MHz) of radio spectrum is currently being used for old analogue television (TV) services, although the Digital Switchover to digital terrestrial TV has allowed 800MHz to be freed up (Digital Dividend) for use by Mobile Broadband. This process is also expected to be completed next year.

Ofcom's Chief Executive, Ed Richards, said:

"The auction is not only critical to the future of the UK mobile telecommunications market but it is also of significant importance to the wider economy. It will support a wide range of data services that are fast becoming essential features of the modern world.

Our role as the independent regulator is to award this spectrum in a way that secures the best use of the spectrum for the benefit of citizens and consumers in the UK.

That is why we are proposing to design the auction in a way that not only encourages investment but also promotes competition and delivers wide coverage of services."

In total the bands up for grabs amounts to three quarters of the mobile spectrum that is in use today and should significantly widen the coverage of mobile broadband to 95% of the UK population. Crucially Ofcom will include a number of safeguards and coverage conditions to promote competition.

Several operators, including Three (3) UK, have called upon Ofcom to ensure that its auctions are fair. These remarks came shortly after both O2 and Vodafone were allowed to use their existing 2G spectrum in the 900MHz and 1800MHz bands for faster 3G services. Likewise others have demanded that Ofcom include provisions to ensure the use of such spectrum for rural areas as well as urban ones.

Ofcom agrees that "there are risks to future competition if bidders could bid for and acquire any amount of spectrum in an open auction". The regulator has therefore proposed two measures that will promote competition at the national wholesale level.
Ofcom's Proposals to Safeguard Competition

* First we propose to ensure that after the auction, subject to demand, there are at least four holders of a minimum spectrum portfolio that mean they are credibly capable of providing high quality data services in the future. However a gap would be left open for new entrants.

* Second we propose to set safeguard spectrum caps. These would place restrictions on the amount of spectrum each participant could win in the auction.
Ofcom has also proposed to include a coverage obligation in one licence for the 800MHz spectrum. This would demand a network that is capable of providing mobile services with a sustained downlink speed of not less than 2Mbps with a 90% probability of indoor reception to an area within which at least 95% of the UK population lives.

The regulator believes that the above measure would result in coverage of future mobile broadband services that approaches today's 2G coverage by the end of 2017. However Ofcom stopped short of proposing to use the award to address existing voice and data not-spot issues, although it will consult upon this separately later in the year.

ofcom_spectrum_auction_uk_2012.jpg

Finally the consultation also covers a proposal to revise the level of annual licence fees for 900MHz and 1800MHz spectrum to reflect full market value, which will mostly apply to both O2 and Vodafone UK. It also seeks to liberalise those bands to allow for LTE (4G) services too. The current consultation is open until 31st May 2011. Further consultations, such as one examining any interference concerns, will follow.

It's worth remembering that this is a very long process and one that will not be fully complete until the end of 2013 or early 2014. As a result next gen 4G services based off 2.6GHz and 800MHz will not surface until 2014 at the earliest.
Ofcom 800MHz and 2.6GHz Spectrum Auction Consultation
http://stakeholders.ofcom.org.uk/consultations/combined-award/
UPDATE 2:10pm

Outsourcery has issued a statement that calls upon Ofcom to ensure that operators who buy into its auction will focus upon the "last mile" of rural connectivity first.

The Chief Technical Officer for Outsourcery, Mark Seemann, said:

"4G will support a wide range of data services that are fast becoming essential features of the modern world and I hope that the UK will follow the German model of auctioning 4G – ie the ‘last mile’ implemented first, otherwise the rural areas which provide a base for many of the UK’s lifeblood businesses (SMEs) will miss out once again.

To try to resolve issues that arose following the (previous) 3G auction, I believe Ofcom may specify auction winners will have to extend their 3G networks further into rural areas as a means of ensuring a fairer distribution of services – that is provide caveats as part of the terms and conditions."

Ofcom does appear to be calling for something like that, although they stopped short of imposing a strict requirement to focus on the remotest areas first.
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