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Executive Summary

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 band 412-414 MHz paired with 422-424 MHz. These frequencies are not currently licensed for use (though there is some use by the Ministry of Defence (MOD)).

1.2 This consultation sets out in detail Ofcom’s proposals for the award of wireless telegraphy licences to use these frequencies, in the light of responses it received to the Spectrum Framework Review: Implementation Plan consultation document published in January 2005.

An overview of the key proposals

1.3 Ofcom proposes, subject to the outcome of the current consultation, to hold an auction in Spring 2006 for the award of a national wireless telegraphy licence to use the spectrum band 412-414 MHz paired with 422-424 MHz.

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

• One UK licence will be offered;
• The licence will have an indefinite term with a minimum period of fifteen years (during which time Ofcom’s powers to revoke will be limited);
• The licence will be tradable;
• The licence will be technology and application neutral;
• The licensee (and any sub or concurrent licensees) will have an obligation to co-ordinate their use so as not to cause undue interference to the radar at RAF Fylingdales and other MOD users in the band.

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

• The auction will take the form of a single round sealed bid auction - each bidder will complete and submit a single bid form; Ofcom will analyse the bids and determine the result of the auction. Each bidder will be able to submit one bid only.
• The winning bidder will be the one which submits the highest bid.
• The auction will be based on a second price rule: the winning bidder will pay the price set by the next highest bid, or the reserve price if there is no other valid bid;
• A reserve price of £50,000 will be set for the licence.

Next steps

1.6 This consultation closes on 24 November 2005. Ofcom plans to hold a seminar on its proposals for interested parties in mid November.

1.7 After considering the responses to this consultation, Ofcom expects to publish the following key documents by early 2006.

• 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;
• 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 one licence of 2x2 MHz awarded for use within the United Kingdom (this excludes the Isle of Man and the Channel Isles).
Wireless Telegraphy rights and obligations	Ofcom proposals
Co-ordination	The licensee will be required to co-ordinate its use with the military radar located at RAF Fylingdales and with other MOD use.
Maximum permissible EIRP	The maximum EIRP for any base station transmitter shall not exceed 50 watts (17dBW) measured in any 25 kHz, for bandwidths up to 200 kHz. There will be an absolute limit on the base station ERP of 400 watts (26 dBW). For mobile stations (including a vehicle mounted transmitter) the maximum power proposed is 10 watts (10 dBW).
Out of band emissions	Emissions shall be no more than -38 dBW in the first 25 kHz below 422 MHz or -45 dBW in the first 25 kHz below 412 MHz. In the second and third 255 kHz channels below 422 MHz the transmitted power will not exceed -53 dBW. In the second and third 25 kHz channels below 412 MHz the transmitted power measured in 25 kHz will not exceed -60 dBW. Out of band emissions in the remainder of the spectrum (i.e. below 411.75 MHz, above 414.25 and below 421.5 MHz, above 424.5 MHz) shall not exceed -66 dBW.
Licence term	The Licence 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 licence. After the expiry of the minimum period, if the licensee continues to hold the licence, 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 format for the band will be a single round sealed bid.
Determining the successful bidders	The winning bidder will be the one which submits the highest bid.
Pricing rule	The winning bidder will pay the amount of the second highest bid made for the licence, or the reserve price if there are no other valid bids.
Transparency	There will be a registration process for participation in the auction. The identities of all those registered will not be made public.
Prohibitions on bidder association and collusion	There will be specific rules to prohibit collusion but no bidder association rule.
Reserve price	A reserve price of £50,000 will be set for the licence.
Deposits	Bidders will be required to submit a deposit at the same time as their bid. The deposit must equal 50% of the bid made. An initial deposit of 50% of the reserve price may be required on registration for 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 the licence remains 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 .
Band manager/spectrum management organisations	The potential for organisations to act as band managers (spectrum management organisations) is considered.

Question: Do stakeholders agree with these proposals for the award of this band or have any other comments on the contents of this document, in particular the ways in which Ofcom envisages how a band manager may operate?

• Award of available spectrum: 412-414 MHz paired with 422-424 MHz [pdf]
  Full print version
• Responses
• Award of available spectrum: 412-414 MHz paired with 422-424 MHz
  Statement published: 06|04|2006

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