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06|08|04

UK spectrum management Trading mechanisms, liberalisation of use, access and innovation

Ofcom has regulatory responsibilities from broadcasting through to telecommunications. The most significant point of common interest is in the key raw material of most modern communications – the invisible but critically important radio spectrum.

Ofcom has today published an overview of the steps it intends to take in 2004-05 to introduce greater flexibility and freedom of use to radio spectrum management.

The radio spectrum is used for hundreds of different kinds of communications services, from taxi two-way radios, maritime and aviation communications and TV and radio broadcasting to mobile phones, satellite services, wireless broadband, radar and wireless links for fixed-line telecommunications networks.

Radio spectrum is a finite resource and multiple users must co-exist without causing interference to each other. International agreements intended to avoid interference whilst allowing common use across borders also place constraints on the UK’s use of parts of the spectrum.

In short, rather like land, nobody makes more spectrum. However, each country can make more of what it has, through efficiency of use and greater innovation in areas such as data compression and dynamic frequency selection technology.

Section 3 of the Communications Act 2003 therefore requires Ofcom to ensure the UK's airwaves are used as efficiently as possible.

Historically, spectrum has been managed through a top-down, centrally-run approach, in which Governments (or Government agencies) controlled every aspect of the allocation of the rights to use wireless communications services.

Ofcom believes that this approach reduces scope for the most efficient possible use of available spectrum; users tend to be better placed than governments to decide how best to meet market demand. Ofcom also believes that this approach does not give users sufficient flexibility to make innovative new uses of existing spectrum.

These conclusions build on the findings of the 2002 independent review of radio spectrum led by Professor Martin Cave and commissioned by the Department of Trade and Industry and HM Treasury. Those findings were subsequently reflected in the Communications Act 2003.

Greater freedom for spectrum users

Ofcom will therefore take the following steps in 2004-05 to provide a revised spectrum management framework with appropriate market mechanisms and incentives for efficient use and innovation:

1) August 2004

Statement on spectrum trading, published today. Spectrum trading will allow companies and individuals holding licences to operate wireless transmission services to buy and sell their rights in an open market. Ofcom intends that the first classes of licences will become tradeable at the end of 2004.

Ofcom received 114 responses to its spectrum trading consultation published in November 2003; the proposed introduction of spectrum trading generally received strong support from stakeholders.

2) September 2004

Publication of detailed consultation on spectrum liberalisation. This will set out proposals for removing unnecessary restrictions on licences, so that licensees can change the use of spectrum. At present, licences specify in detail the use that can be made of spectrum. Liberalisation will be introduced in a phased way across most types of licence between 2004 and 2007.

3) September 2004

Publication of draft spectrum trading regulations governing the manner in which the new spectrum trading market must operate, together with details of the proposed Ofcom Spectrum Registry (similar in structure and approach to the Land Registry) and a statement on Ofcom’s approach to ensuring effective competition in the spectrum market.

4) November 2004

Publication of Ofcom’s proposed Spectrum Framework Review. This will bring together Ofcom’s conclusions on spectrum trading and liberalisation within the context of a broader strategy on all spectrum management issues.

5) December 2004

Publication of draft roadmap on approach to mobile and wireless broadband services.

6) December 2004

Spectrum trading and liberalisation will launch, beginning with the following licence classes:

• Analogue public-access mobile radio
• National paging
• Data networks
• National and regional private business radio
• Common base stations
• Fixed wireless access
• Scanning telemetry
• Fixed terrestrial links

7) From 2005

Additional licence classes will become tradeable and restrictions on change of use will be liberalised in 2005 and in each of the subsequent three years. Throughout, Ofcom will also continue to auction released and returned spectrum allocations on a business-as-usual basis.

Ofcom Chief Executive Stephen Carter said: "Access to a flexible and transparent market coupled with the ability to explore innovative new uses for existing spectrum will maximise the effective use of a finite national resource.”

Ends.

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