Annual Report and Accounts 2000-2001

Objective 1

To support Departmental objectives by: managing spectrum in accordance with a clear strategic plan, which: promotes enterprise, innovation and competitiveness; makes full and appropriate use of all available spectrum management tools, including regulation, administrative spectrum pricing and, where suitable, auctions in order to promote the best economic use of the radio spectrum; and carries forward innovative and progressive approaches to spectrum management.

The Agency has continued to make spectrum available for innovation and growth, especially in the provision of new fixed and mobile broadband services. This is done in accordance with the current Spectrum Review, published in spring 2000. The next edition is planned for autumn 2001.

Public mobile telephony

The number of subscribers to the four operators (BT Cellnet, Vodafone, Orange and One 2 One) offering second generation services has again increased dramatically over the past year and now exceeds 40 million.

Wireless Access Protocol (WAP) services were launched this year providing mobile Internet functionality. GPRS (General Packet Radio Service) has been or is currently being installed on the four 2G networks. Volume supplies of GPRS handsets are imminent, with networks expected to launch service in mid-2001.

Plans for the closure in 2001 of the analogue (E-TACS) radio telephony networks were finalised. Some of the spectrum has been assigned to the operators for additional capacity in their digital 2G (GSM) networks. Half of the remaining spectrum will be used for a pan-European railway signalling network and the other half will be the subject of a consultation which is planned to take place in summer 2001.

3G auction

The auction of Wireless Telegraphy Act spectrum licences for third generation (3G) mobile telecommunications services took place between 6 March and 27 April 2000. This was the first use of auctions by the UK to assign spectrum licences and the first 3G spectrum auction in the world.

Five licences were offered in the auction. To increase sustainable competition in the UK mobile market, the largest of the five licences was reserved for a new entrant. Increased competition is expected to encourage the faster introduction of 3G services, innovation, and benefits to consumers.

13 companies, of which nine were potential new entrants, participated in the auction. After 157 rounds of bidding, licences were awarded as shown below to the existing UK mobile operators and TIW, a Canadian based telecommunications company. TIW UMTS (UK) Limited was subsequently sold to Hutchison Whampoa and renamed Hutchison 3G UK Limited. Further background and information on the UK 3G auction is available on the Radiocommunications Agency's website (www.radio.gov.uk).

Table 1.1: Auction results

Future Development of Third Generation (3G) networks

The World Radio Conference (WRC) 2000 was very successful in identifying additional spectrum in the 2.5 GHz band for 3G services. This was a key objective for the UK, and introduces the possibility that spectrum may become available later this decade to address the demand for additional spectrum once the 3G networks deploy and begin expanding their subscriber bases. Spectrum currently used for second generation cellular networks (GSM) was also identified as potential 3G spectrum subject to the migration of existing services. This is therefore a longer-term prospect for Europe, given the substantial investment in 2G networks and the large subscriber base.

Public Mobile Paging operators

Following a public consultation in late 1999, PageOne Communications Ltd has been awarded a licence to provide two-way paging services.

Common Base Stations (CBS)

Since February 1999, stand-alone CBS licensing work has been carried out at RA local offices. In May 2000 a review was undertaken to judge how successful this change had been, and the result of this review, together with a customer survey, showed that customers were happy with the service provided. RA directors agreed that the process of devolution should continue, and it was decided to move single site and multi-site trunked CBS systems licensing to the local offices. Consequently, from 1st April 2001 all CBS frequency assignment and licensing work has been carried out by local office staff.

The Agency also decided to open up sub-band I of Band III for CBS assignment. The band was initially made available for UHF1 migration but is now available to existing operators who want to expand their systems but have not been able to do so due to lack of spectrum in the VHF band.

In consultation with the CBS policy group, RA agreed that data would be permitted on shared as well as on exclusive channels, provided the data systems were CSMA-based and the channels met the loading criterion with voice traffic at busy times.

The 3G auction hits the headlines

Fixed Wireless Access

Fixed Wireless Access (FWA) services have been operational in the UK since October 1996. There are now three successful commercial operators providing services; Atlantic Telecom Group PLC, Tele-2 and Zipcom. Most recently Zipcom has commenced services on a trial basis with a commercial launch planned for June 2001.

RA is currently consulting on the release of spectrum to facilitate always-on internet and data services with data rates up to 2 MB/s in spectrum at 3.4 GHz and 10 GHz. We anticipate that this spectrum will be released towards the end of 2001.

Public TETRA

RA has been working closely with the MoD, Dolphin Telecommunications (the public TETRA licensee) and industry to identify additional spectrum from within the 410-430 MHz band. The current policy is to award further spectrum to Dolphin based on demonstrable demand.

Dolphin is currently continuing to roll out a network providing coverage to over 90% of the population. The present roll-out phase is providing services in high traffic major urban areas as well as improved in-building penetration.

RA will issue a further review statement in mid-2001 that will reflect the situation at that time.

Video conferencing is one of the many applications of broadband high-speed Internet connection

Broadband Fixed Wireless Access (BFWA) at 28GHz and 40GHz

Following extensive consultation, Patricia Hewitt, the then Minister for Small Business and E-commerce, announced in June 2000 arrangements for awarding 28GHz BFWA licences by auction. Three spectrum licences were offered in each of eleven English regions, plus Scotland, Wales and Northern Ireland. Reserve prices ranged from £4m per licence in London to £100k per licence in Northern Ireland. Licences were to be for fifteen years, and "use it or lose it" obligations were to be placed on all operators to ensure that services were rolled out in a timely and efficient manner. The arrangements were drawn up after extensive consultation with industry and also took account of a market analysis undertaken by KPMG Consulting for the Agency. The auction design was based on advice from ELSECo, who are based at University College London.

The auction ran from 10 to 20 November. At the end of the auction sixteen licences were awarded to six bidders in seven licence regions, covering Greater London, Greater Manchester, West Midlands, Yorkshire, North England, Scotland and Northern Ireland. The value of the 16 licences issued was £38,160,000.

The services that can be delivered by licensees will provide competition to fibre, cable links, DSL phone lines and satellite. They will add to the broadband coverage provided by these technologies and assist in the delivery of broadband services across the United Kingdom.

The Agency's report to Ministers on the outcome of the auction included a proposal for allocating the licences that remained unsold at the end of the auction.

During the year KPMG completed a market study of the potential for BFWA in the 40GHz band. To assist in the development of proposals for awarding licences, the Agency will consult prospective licensees and other interested parties on the technical and economic issues.

Private business systems

Progress has been made during the year on several major projects.

The 5 GHz Advisory Group held a number of meetings following a workshop in July 2000. This has resulted in the Agency drafting a Regulatory Framework document and preparing for a public consultation in 2001 on the partitioning and use of this spectrum for RLAN and HIPERLAN.

Work has continued on planning the re-alignment of UHF2 spectrum at 450 to 470 MHz. With the Home Office, RA has planned a Public Safety Radio Communications Project which will enable the police service to vacate spectrum and thereby permit the first stages of realignment to take place. Further work to fully scope the project, assess the scale of the engineering work and gauge the economic impact has started and will continue throughout 2001.

The PMR sector will benefit from the introduction of a new technical assignment tool, MASTS, which will enable faster and more efficient assignments to be made. MASTS will initially be a tool for RA staff, but within the next three to four years, its integration with e-licensing will enable customers to use it to make new applications via the RA website.

Several projects designed to develop PMR for the future have begun:

• A new polite channel access protocol for data systems has been developed. The licensing arrangements will be established through consultation and should be available for implementation next year.
• New spectrally efficient technologies are under development and work to provide harmonised spectrum for these systems is under way.

Fixed Terrestrial and Satellite Links

There has been steady demand for new terrestrial point-to-point links throughout the year, with an average of just over 400 fixed links being requested per month. The total number of current licensees and licensed links is shown in tables 1.2 and 1.3.

A high priority during the year has been to achieve a sustained improvement in assignment and licensing turn-round times for fixed terrestrial links, and the level of service provided is now very close to the published target. Other work has included progress on the integration of the Fixed Links Spectrum Management (FiLSM) computerised assignment tool with the RULES licensing system, which will enable us to rationalise application and licence processing procedures and further improve customer service. Full integration of the Satellite Earth Station Co-ordination (SECOM) technical system into RULES was achieved during the year, and a further development was the implementation by the ERO of One-Stop Shopping (OSS) software for all satellite earth stations.

To meet the expected high demand for additional links to complete existing networks, and to cover future requirements such as Third Generation Mobile operations, the Agency's Fixed Terrestrial and Satellite Links Unit has been working in several areas to ensure maximum availability of spectrum to operators of fixed links:

• in international fora, including WRC 2000, the UK's FSS and FS interests have been protected and promoted;
• Interface Regulations have been produced to implement the R&TTE Directive;
• the phased programme to bring under direct Agency control those fixed link frequency bands currently self-managed by major operators has continued to plan, with the last band scheduled for return by 2003.

All these areas of work, together with the availability of new bands at 50 GHz and above, have been reviewed with industry representatives. The resulting paper, which recommends future management arrangements to ensure fair and equitable access to the pool of fixed links spectrum, will be considered by the Fixed Link Coordination Committee during 2001.

With assistance from industry representatives, a pricing algorithm for permanent and transportable earth stations was developed for inclusion in the forthcoming 2001 Fees Regulation. Discussion has also continued on possible future improvements to the terrestrial fixed links pricing regime.

Table 1.2: Fixed Terrestrial and Satellite Links

Galileo - satellite based navigation and positioning service

An EU initiative, the Galileo project was conceived in the early 90s and endorsed in 1994. This year RA worked closely with colleagues in the Department of the Environment, Transport and the Regions (DETR) to ensure that spectrum was identified at WRC 2000 for Galileo, and work on the project will continue throughout 2001.

Composed of 27 or more satellites, Galileo will be under international civil control and will offer global coverage, independent from but complementing the US Global Positioning System (GPS). It will provide positioning and timing services for commercial, safety, security and governmental applications, including an enhanced search and rescue service, and will host limited navigation-related communications capabilities. In conjunction with terrestrial components it will offer integrity guarantees crucial for "safety of life" applications.

The project is open for industry partners to participate.

Broadcasting

Notwithstanding digital developments within sound broadcasting, analogue services continue to expand. The limited availability of spectrum led to the publication of the FM Review in May 2000, which looked at the capacity within the band to cater for more radio services. The results of the review were fed into the Communications White Paper, including the debate concerning a new tier of radio, known as Access Radio.

Digital TV and sound transmissions have now been operational since 1998. The growth of digital TV take-up, currently 30% of households across the various platforms, has been excellent for a new technology. The Agency has been closely involved in efforts to promote digital TV and, in particular, to improve the coverage and robustness of terrestrial digital TV signals, which will help to build further on take-up. Also, with colleagues within Government, we are developing and implementing a clear strategy for completing the switchover from analogue to digital TV broadcasting in a way that ensures the most effective use of the spectrum whilst also safeguarding viewers' interests.

The price of receivers has not helped the take-up of digital radio. Despite this, digital radio choice is increasing and new multiplexes are now being licensed on a monthly basis. Prices will fall further, and new converged proposals for mixing sound and data broadcasting with GSM/3G within the same receiver are also being proposed. Additional spectrum at 1.5 GHz will shortly be made available for digital radio. All of these developments augur well for the ultimate success of digital radio technology, although it is still too soon to consider the possibility of closing down analogue sound transmissions.

Table 1.3: Number of Licences on issue at 31 March

Footnotes

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