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13|12|07

Choice, competition, innovation: Delivering the benefits of the Digital Dividend

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Ofcom today announced how the radio spectrum that will be freed-up through digital television switchover will be awarded for new uses for the benefit of citizens and consumers in the UK.

Spectrum is a finite resource that is the essential ingredient for all wireless communications. Demand for spectrum is growing continually with changes in technology and consumer trends. Spectrum is used throughout the economy and society, from the emergency services and defence, to radio and television broadcasting, and mobile phones and wireless internet, and underpins 3 per cent of the UK's GDP.

The digital dividend spectrum is in the sought-after UHF band currently used by the terrestrial television broadcasters. Transmissions in this band cover large geographical areas with relatively few transmitters, and penetrate buildings well. This makes the digital dividend the highest quality spectrum likely to be released in the UK in the next 10 or 20 years

The digital dividend is suitable for a wide range of uses including:

• ultra-fast wireless broadband services;
• mobile television;
• more digital terrestrial television channels in either standard or high-definition;
• local television;
• wireless microphones; and
• low-power applications developed from wi-fi.

 

Maximising the benefits for citizens and consumers

Ofcom’s objective is to ensure that the digital dividend is used to deliver the maximum benefit for citizens and consumers in the UK.

Following consultation and an extensive programme of research, Ofcom has concluded that the most effective way to maximise the value to society is to take a market-led approach, giving users the freedom to decide how spectrum is used and clear incentives to use it efficiently.

This approach will create the maximum flexibility for different services. It will also allow the use of the spectrum to change over time, as demand develops, technology evolves and new services become available.

This approach of awarding spectrum to those who will make the most of it and value it most will deliver significant benefits to society, including:

• innovative technologies and services that will be launched using the digital dividend;
• more competition in wireless services which could lead to greater choice and lower prices; and
• a significant contribution to the UK, as the overall benefit from the use of the digital dividend is estimated to be £5bn to £10bn of added benefit to the economy over 20 years.

To maximise these benefits, Ofcom plans to auction most of the digital dividend in 2009, offering licences that allow users to decide the technology and service, and that can be traded after award.

 

Specific spectrum uses

Ofcom has considered whether a market-led approach could prevent important spectrum uses from getting access to this spectrum. We have identified just one compelling case where we should reserve spectrum for a particular use, to avoid the risk of market failure in an auction. We will therefore award spectrum by ‘beauty contest’ for the programme-making and special events sector (usually referred to as PMSE), who principally use the spectrum for wireless microphones.

The consultation also identified a number of potential uses of the digital dividend in which citizens, consumers and industry expressed a keen interest. Ofcom will therefore package the spectrum to make it suitable for these uses. This relates to the cleared spectrum (the frequencies that will be cleared of broadcasting as a result of digital switchover) and the interleaved spectrum (the ‘white spaces’ that exist geographically between television transmitters to prevent interference between them).

These decisions create new opportunities for a wide range of uses:

1. National digital terrestrial television in standard or high definition. Ofcom has already demonstrated that new High Definition and Standard Definition channels can be delivered on Freeview without the need for any digital dividend spectrum. This was the subject of proposals published by Ofcom on 21 November 2007. In addition, Ofcom will package the cleared spectrum in a way that makes it suitable for more digital terrestrial television, but it will not be reserved for this use.
2. Cognitive radio. This is a new wireless technology that shares with other services by detecting when spectrum is not being used. It is hoped that cognitive radio devices will be able to work together to create so-called ‘mesh networks’ that can support a range of wireless applications such as high-speed broadband access across urban and rural locations. Ofcom is proposing to allow cognitive radio to use the interleaved spectrum provided it can be shown this does not cause interference to other spectrum users.
3. High speed mobile broadband and mobile television. Our market research has found keen interest in high speed mobile broadband. We will package the cleared spectrum in a way that makes it suitable but not reserved for these uses.
4. Local television. Ofcom will auction packages of interleaved spectrum suitable but not reserved for local television in some 25 locations across the UK where there is evidence of demand to provide this type of service.
5. PMSE spectrum users. Ofcom will award most of the available interleaved spectrum by ‘beauty contest’ to a band manager who will be required to manage spectrum for PMSE users. This process will be designed to ensure that the licensee’s interests are aligned with those of PMSE users. The licensee will earn revenue by charging for access to the spectrum but will be required to meet reasonable demand from PMSE users on fair, reasonable and non-discriminatory terms. These measures will ensure that PMSE users can continue to access spectrum while moving towards a more market-based approach over time.

 

Further consultations

Ofcom will publish further consultations in spring 2008 on the detailed design of the digital dividend awards. These consultation documents will include detailed proposals to ensure that the awards encourage competition in downstream markets and guard against any anti-competitive behaviour such as hoarding.

Ed Richards, Chief Executive of Ofcom, said: “The digital dividend will be one of the most significant and valuable spectrum releases in the UK for 20 years. Our approach is designed to maximise these considerable benefits for UK citizens and consumers as a whole.

“We can expect the benefits of the digital dividend to include more choice, fresh competition and technological innovation.”

The digital dividend statement can be found at: http://www.ofcom.org.uk/consult/condocs/ddr/statement/

Ends.

 

Notes for Editors

 

1. The digital dividend is in the UHF band in the frequencies 470-862 MHz. It is made up of two types of spectrum:

• Cleared spectrum: 112 MHz that will become available as a result of digital switchover (channels numbered 31-35, 37, 39-40 and 63-68) and a further 8 MHz (channel 36) that will be cleared of its existing use by airport radar in March 2009.
• Interleaved spectrum: the ‘white space’ that exists geographically between television transmitters to prevent interference between them; in any one location there is typically a large amount of interleaved spectrum available (up to 208MHz), but the number and nature of the frequencies available vary from place to place.

2. Ofcom’s consultation document on upgrading digital terrestrial television, published on 21 November, can be found here: http://www.ofcom.org.uk/media/news/2007/11/nr_20071121

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Video briefing

Philip Rutnam, Partner, Spectrum Policy Group, discusses the publication of the statement on the Digital Dividend Review.

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