Home > Media and Analysts > Media and Analysts FAQs > Radiocomms FAQs > Spectrum liberalisation statement

Spectrum Liberalisation Statement:FAQs

1. Who needs Wireless Telegraphy Act (WT Act) licences?

Most providers of wireless communications services, from taxi companies to mobile phone operators and TV and radio broadcasters. The main exception is persons using equipment that is exempt from a requirement for licensing - typically low-power devices that aren't likely to cause any harmful interference to others.

2. What has been announced?

Ofcom today published the conclusions from its public consultation on spectrum liberalisation. The proposals were positively received so Ofcom will proceed with the first phase of liberalisation for holders of Business Radio, Fixed Wireless Access and Fixed Links licences.

3. What is liberalisation?

Most spectrum licences include restrictions on the services and technology that can be deployed over the specified band of frequencies. Liberalisation reduces or removes these limitations and will allow licence holders greater flexibility in the way they use their licences.

4. What are the benefits of liberalisation?

Faster introduction of new services and technologies will lead to more innovation and competition.
Consumers will gain from new services and lower prices.
Businesses will gain opportunities to generate value for customers and create new revenue streams.

Liberalisation combined with spectrum trading should generate substantial economic benefits. According to recent report for the European Commission, new services brought in as a result of spectrum trading and liberalisation could generate as much as €9bn a year for the EU. The UK will undoubtedly share in this.

5. How is this different to the status quo?

Regulators have traditionally adopted a ‘command and control’ approach to dictating licence terms, imposing a variety of restrictions depending on the service. This tactic was appropriate during the infancy of spectrum management, when there were relatively few users and uses for radio frequencies. But the rapid acceleration of technical progress and growing demand for spectrum make it necessary to remove unnecessary restrictions – otherwise we could see innovation stifled and inefficient use made of spectrum.

6. What is set to change?

Ofcom proposes to reduce the role of the regulator and encourage the market to decide how the spectrum should best be used. It will do this by reducing restrictions on WT Act licences so that licence holders have more freedom to determine the use to which they put it.

7. Are there any risks?

If liberalisation were allowed unchecked, neighbouring frequencies offering similar services might interfere with each other, resulting in a poor experience for the user and loss of revenue for the operator. To offset this risk, Ofcom intends to begin by looking at licence change applications on a case-by-case basis to determine the potential for interference. It also proposes to introduce benchmarks for spectrum quality.

8. How will it work in practice?

Ofcom is implementing a phased approach to the introduction of liberalisation.

Variation of individual licences considered by Ofcom on a case-by-case basis. This enables greater control by Ofcom but is administratively burdensome and users have less certainty about what changes will be permitted when planning future business strategies.
In the future, Ofcom aims to make licences more generically flexible so that, within defined liberalisation ‘scenarios’, licence holders can change the use they make of the spectrum without obtaining prior approval from Ofcom. This should be less burdensome administratively and give users more certainty about what is permitted.

9. Why are Business Radio, Fixed Wireless Access and Fixed Point-to-Point Links licences being singled out as the first to be liberalised?

Ofcom is taking a phased approach to the introduction of liberalisation, recognising the complexity of the issues for Ofcom and spectrum users. These three licence classes have been identified as ones where it is practicable to liberalise immediately, and where there should also be benefits from adopting less interventionist regulation.

We plan to consult on extending liberalisation to some other licence classes later in the year when a new assignment tool is available. The Spectrum Framework Review and Spectrum Framework Review: Implementation Plan make proposals to extend liberalisation beyond that.

10. Does this mean other licence holders will be able to change the way they use spectrum to offer mobile telephony/Internet services?

A recent consultation – ‘Spectrum Framework Review: Implementation Plan’ looks at the potential for removing restrictions on the use of other spectrum, so that it could be used for mobile services. It proposes that in general Ofcom should be willing to remove restrictions (where it is possible to do so under law, and given interference constraints and international obligations) that prevent the use of spectrum for mobile services (other than 3G services) as soon as practicable.

The same document considers whether there is a case for a transitional period before removing restrictions on the ability to use spectrum not presently used for mobile services for 3G services in the future. It suggests that this transitional period might last till 2007.

11. Why 2007?

Retaining restrictions on the provision of 3G services until 2007 is just one of the options Ofcom is considering. This would be about seven years from the auction of the 3G licences. There is an argument that this proposal would give an appropriate notice period to the existing licensees.

12. How about spectrum currently used for 2G services. Will that be liberalised too?

The document considers the issues raised by the possible extension of spectrum liberalisation to the existing 2G bands. It identifies a number of considerations here, including international legal constraints (eg the GSM Directive) and the structure of the market for 3G services that was created by the 3G auction in 2000. It seeks views about the best way forward. In parallel, Ofcom is commissioning an economic study by external consultants to evaluate the scale of the issues and possible solutions.

13. How does this announcement affect broadcast licence holders?

Ofcom is proposing that they should not be able to change the use of their licence in the short term, although this will be subject to review in the light of developments on wider policy issues in the sector, including digital switchover.

14. How does this fit into Ofcom’s overall vision for spectrum management?

In November 2004 Ofcom put forward proposals which set out its preferred approach to spectrum management. The document says that we would like the market to have a far greater say in how the spectrum is allocated and used.

We propose that organisations should be able to trade the rights to spectrum licences in an open market and also change the use they make of their spectrum allocation. This will spur competition and innovation and also ensure that best economic and technical use is made of spectrum.