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1.1 As part of Ofcom’s plans to implement its strategy of ensuring optimal use of the radio spectrum it has developed a programme of awards of wireless telegraphy licences that is designed to put unused or under-used spectrum into the market. One such award is of wireless telegraphy licences for the spectrum bands 10 GHz, 28 GHz and 32 GHz. These bands are not currently licensed for use, except for some regional broadband fixed wireless access licences in the 28 GHz band. Part of the 32 GHz band has been open for fixed links assignments since 2003 but there are no current assignments in it and there is a moratorium on applications pending the outcome of this consultation. There is also some use of the available 10 GHz band by the Ministry of Defence.

1.2 This consultation sets out in detail Ofcom’s proposals for the award of wireless telegraphy licences to use these bands, in the light of responses it received to the Spectrum Framework Review: Implementation Plan consultation document published in January 2005. It also explains Ofcom’s proposal for deferring the award of licences in the 40 GHz band.

An overview of the key proposals

1.3 Ofcom proposes, subject to the outcome of the current consultation, to hold an auction in 2007 for the award of UK wireless telegraphy licences to use the spectrum bands 10 GHz, 28 GHz and 32 GHz.

1.4 The key elements of the proposed spectrum packaging and licensees’ rights and obligations for the spectrum to be auctioned are as follows:

• Twelve licences will be offered. Most will have UK coverage - one in the 10 GHz band, two in 28 GHz, and six in 32 GHz. In addition, three in 28 GHz will have varying degrees of geographical coverage.
• The licences will have an indefinite term with a minimum period of fifteen years (during which time Ofcom’s powers to revoke will be limited).
• The licences will be tradable.
• The licences will be technology and application neutral.

1.5 The key elements of the proposed award process are as follows:

• All licences will be awarded through a single auction.
• The auction will take the form of a simultaneous multiple round auction.
• The winning bidders will be those which submit the highest bids for each licence.
• A minimum bid price of £50,000 will be set for each licence.

Next steps

1.6 This consultation closes on 7 September 2006. Ofcom plans to hold a seminar on its proposals for interested parties in late July.

1.7 After considering the responses to this consultation, Ofcom expects to publish the following key documents in 2007.

• a short statement on this consultation;
• an Information Memorandum, describing in detail the relevant information for the award, such as the award procedure and rules, prospective licence conditions and other information likely to affect use of the bands;
• draft regulations setting out the auction rules; and
• draft regulations to allow spectrum trading for this licence.

1.8 Ofcom will consider any comments it receives on the draft auction regulations before finalising them. The regulations will then be made to allow Ofcom to hold the auction. Before the auction is held Ofcom expects to hold a further “question and answer” session, in particular on the rules for the auction.

Detailed summary of Ofcom’s proposals

1.9 The table below sets out in summary form Ofcom’s proposals for this award.

Table 1 – Summary of Ofcom’s proposals

Spectrum Packaging	Ofcom's proposals
Number of licences	There will be 12 licences awarded for use within the United Kingdom (this excludes the Isle of Man and the Channel Isles): one at 10 GHz, five at 28 GHz and six at 32 GHz.
Wireless Telegraphy rights and obligations	Ofcom proposals
Licence conditions	The licences will be technology neutral. The licence conditions will be the minimum necessary to: ensure compliance with international requirements; and ensure effective use of the licensed frequencies by controlling interference between different licensed services. The technical conditions will comprise a constraint on use defined by reference to spectrum masks. They are set out in section 7 of this document.
Licence term	The licences will have an indefinite duration, with a minimum term of 15 years during which Ofcom's powers to revoke will be limited. Ofcom will have the power to revoke for spectrum management reasons on not less than 5 years' notice after the minimum period, which could lead to the licence being terminated the day after the expiry of the 15 year minimum period or any time thereafter.
Licence fees	The auction will determine the fee payable for the licences. After the expiry of the minimum period, if the licensees continue to hold the licences, there may be additional charges in line with Ofcom's policy on spectrum pricing at that time.
Spectrum trading	The licences will be tradable. All types of trade (partial or total; and concurrent or outright) will be permitted.

Award Mechanism and Rules	Ofcom's proposals
Auction format	The auction will be a simultaneous multiple round auction (SMRA).
Determining the successful bidders	The winning bidders will be those that submit the highest bids for each licence.
Pricing rule	The winning bidder for each licence will pay the amount bid for the licence, or the minimum bid price if there are no other valid bids.
Transparency	The auction will be fully transparent. Comprehensive information about the number, amount and type of bids on each lot will be released after each round. In addition, bidders will able to monitor the identity of all other bidders and the bids they make.
Prohibitions on bidder association and collusion	There will be specific rules to prohibit collusion and bidder association.
Minimum bid price	A minimum bid price of £50,000 will be set for each licence.
Activity and eligibility rules	Activity rules will help manage the pace of the auction and ensure each bidder participates fully. For each round the auctioneer will set the level of activity required of bidders. Each applicant will be required to declare the number of spectrum lots that it wishes to bid for. This will determine its initial quota, as a bidder, of eligibility points. One eligibility point will allow a bid to be made on one spectrum lot. During the course of the auction a bidder’s eligibility points will be affected by the application of the activity rules.
Deposits	Ofcom will set an initial deposit of £25,000 for each spectrum lot. A mechanism will be introduced to ensure that bidders increase their deposits in a way that reflects their aggregate bid levels at set points during the auction.
Payment terms	Winning bidders will be required to pay 100% of the fee by the date set in the Regulations before the licence is issued.
Unsold licences	If licences remain unsold, either through absence of bids or default, Ofcom will reconsider its approach to release of the spectrum, and will choose whatever course of action it considers appropriate at that time .

Questions:

1. Do stakeholders agree with the proposals for the award of licences in the 10 GHz, 28 GHz and 32 GHz bands in 2007?
2. Do stakeholders agree with the proposal to include in the award of the 32 GHz band that portion of the band that has been open since 2003 for point-to-point applications?
3. Do stakeholders agree with the proposals to defer the release of the 40 GHz band and review the position in two years’ time?
4. Do stakeholders have any other comments on the contents of this document?

The full print version is available below

• Award of available spectrum: 10 GHz, 28 GHz, 32 GHz and 40 GHz [pdf]
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