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Executive summary

Spectrum is a key resource

Radio spectrum is a vital input to electronic communication services and networks and a major asset to the UK. One of Ofcom's primary statutory duties is to ensure the optimal use of the radio spectrum in the interests of citizens and consumers. It is essential that the regulatory regime for spectrum is able to respond to changes in the demand for and use of spectrum in the UK.

The way we manage spectrum is changing

Ofcom published its Spectrum Framework Review (SFR) in November 2004. This extends and consolidates earlier publications relating to spectrum management, especially those making it possible for licensees to buy and sell spectrum in the market (“spectrum trading”) and reducing or removing unnecessary restrictions and constraints on spectrum use (“spectrum liberalisation”).

Ofcom’s vision for spectrum management, as set out in the SFR, is for market forces to play an increasingly important role in determining how spectrum is used. Ofcom believes that this will encourage efficiency in spectrum use, by increasing the likelihood that spectrum will be held by those who can make best use of it, and by creating more freedom for spectrum to be used for more valuable applications.

Two important areas of implementation

This document addresses how the vision for spectrum management set out in the SFR can be implemented in two key areas. It meets Ofcom’s commitment to provide a “roadmap” for these changes in spectrum management. The two areas are:

• The release of newly available spectrum into the market over the next 2-3 years.
• The transition to spectrum trading and liberalisation in relation to mobile services.

Newly available spectrum

This document identifies the spectrum that Ofcom currently expects to be able to make available to the market over the next 2-3 years. Its focus is on new licence awards that are likely to follow a competitive process, usually an auction. In publishing these proposals, Ofcom’s aim is to give the market more clarity than before about likely future opportunities to obtain new spectrum licences, and to seek views on a wide range of issues, including the relative priority of releasing different bands and the design of new licences.

In total, Ofcom expects that spectrum in about twelve different bands should become available for award over the period 2005-2008. Some of these bands are relatively small, or likely to be of limited application. But others – including the 190MHz of spectrum in the 2500-2690 MHz range – represent substantial capacity in a prime part of the radio spectrum.

Each of the bands is discussed in detail in this document. Where demand for the spectrum is likely to exceed supply, Ofcom generally expects to make awards by auction. Consistent with its general policy towards spectrum management, Ofcom also expects to leave as much freedom as possible to the market to determine the optimum use of the spectrum. In each case where Ofcom does decide to proceed with an auction, we will carry out a further detailed consultation on the details of auction design and spectrum packaging before the awards are made.

The table below summarises the proposals in this document for new awards in bands below 3GHz.

Bands below 3GHz	2005-2006	2006- 2007	2007-2008
1781-1785 MHz/1876-1880 MHz (GSM/DECT guard bands)	●
2290-2302 MHz	●
2010-2025 MHz	●
410-415 MHz/420-425 MHz, 872-876 MHz/917-921 MHz (Ex-Inquam bands)	●
2500-2690 MHz		●
1452 -1492 MHz (L Band)		●
1790-1798 MHz			●

 

It is important to stress that these timings are indicative only. Ofcom’s plans may change following this consultation. Ofcom also faces important external constraints in a number of bands, either because satisfactory arrangements may need to be agreed with public sector users (including the Civil Aviation Authority (CAA) and Ministry of Defence (MoD), or because decisions are needed at European level. As a separate matter, Ofcom has already indicated (see Radio – Preparing for the Future, published 15 December 2004) that it expects to consult on the timing of an award in Band III in Spring 2005.

Ofcom also expects to make a number of awards in bands over 3 GHz during this period. These include the possibility of further awards at 10GHz, 28 GHz and 32 GHz. Similar caveats apply to the timing of these awards.

Meeting this auction programme will be challenging for Ofcom and for stakeholders. However Ofcom believes that it is important that spectrum is released to the market as soon as possible to allow operators to determine efficient uses of the spectrum and so bring benefits to consumers and citizens.

This document does not contain any major proposals in relation to the spectrum that might be released by the switchover of television to digital broadcasting (within 470 -854 MHz). Ofcom does not to expect to make policy decisions on this until after the Regional Radio Conference in 2006.

The focus of this document is on spectrum that Ofcom already expects to become available for assignment in 2005-08. In the longer term, other spectrum may also become available particularly as a result of the review of spectrum holdings now being undertaken at the Government’s request by Professor Martin Cave. Ofcom is actively supporting this review.

The transition to trading and liberalisation for mobile services

The extension of trading and liberalisation to these bands was discussed briefly in Ofcom’s consultation on spectrum trading in November 2003. This document sets out more detailed proposals on implementing trading and liberalisation for mobile services. In particular, it considers two sets of issues:

• The removal of restrictions from licences that presently prevent the use of spectrum for the provision of mobile services, including 3G services and mobile services other than 3G .
• The potential extension of spectrum trading and liberalisation to the bands currently licensed for 2G and 3G mobile services.

On the first of these issues, this document proposes that Ofcom should in general be willing to remove licence restrictions as soon as practicable that prevent the use of spectrum for mobile services other than 3G services, where it is possible to do so under law and subject to interference constraints and international obligations. Other considerations may also be relevant in some cases, including the terms on which certain licences were recently auctioned.

This document also considers the removal of restrictions from licences that prevent the use of spectrum for 3G mobile services. It identifies a range of considerations that need to be taken into account, and a range of options for balancing these. It suggests that for licences other than the existing 2G licences, the option of allowing the removal of such restrictions after a transitional period has elapsed might offer an appropriate balance between the relevant considerations, and might maximise the interests of citizens and consumers. It suggests that a suitable transitional period might last to 2007. Restrictions on the provision of 3G services could only be removed where it is possible to do so under law and subject to interference constraints and international obligations.

On the second issue, this document identifies several issues that make the extension of trading and liberalisation to the existing 2G bands more complex than is the case with most other bands. These include the existence of European harmonisation measures affecting the use of the bands, and the circumstances of the 3G auction held in 2000. Through this auction the Government created a market structure for the provision of 3G services with five licences, of which the largest was reserved to a new entrant. It is possible that variations in the terms of the 2G licences held by existing 2G licensees (for example to allow 3G services) might have a disadvantageous effect on the competitive position of this new entrant, compared to the other operators.

Given these two important complications, Ofcom considers that further work is needed before firm proposals can be made for liberalising the bands currently used for 2G services. This document therefore sets out an initial analysis of the potential problems and options, for discussion and comment. In parallel Ofcom is also commissioning an independent economic study to evaluate further the scale of the issues and possible solutions. Further consultation may take place once Ofcom has responses to this document and the results of the economic study.

This document also discusses the rollout obligations contained in the 3G licences. It sets out proposed draft guidance on Ofcom's approach to enforcing the obligations for consultation. In brief, this indicates that if the licence obligations are not met by the due date at the end of 2007, then Ofcom would consider the appropriate enforcement action to take in the light of the relevant circumstances at the time. Ofcom’s current expectation is that - other than in the case of serious non-compliance - revocation of an operator's licence is unlikely to be an appropriate or proportionate response.

Next steps

Ofcom invites comments on the issues raised in this document. A number of specific questions are set out (see Annex C for a summary) but other comments are also welcome. The closing date for responses is 24 March 2005.

Following consideration of the responses, Ofcom is likely to publish a number of further documents in order to take forward the wide range of issues and proposals discussed in this document. Publication of these subsequent documents is likely to begin in late Spring 2005.

• Economic study of spectrum liberalisation and the mobile sector
  Full print version
• Allocation options for selected bands
  Full print version
• Technical constraints associated with the 917-921MHz band
  Full print version
• Responses
• Spectrum Framework Review: Implementation Plan [pdf]
  Full print version

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