Alexander Invites Bids For Wireless Internet Licences

E-Commerce Minister Douglas Alexander today outlined the bidding process for the 26 remaining licences for broadband fixed wireless access in England, Scotland, and Wales. The licences will be available from September 2001.

Commercial licence holders will be able to deliver internet and multimedia services over the airwaves.

This is part of the Government's drive to provide competitive broadband services throughout the UK. Broadband fixed wireless access will provide competition to fibre, cable links, DSL phone lines and satellite, which also offer access to broadband services. Together with these existing technologies the Government are closer to delivering broadband across the UK.

Companies will be able to bid for these licences at the reserve price set at last November's auction where these remained unsold. If no other company is interested, the bidder will be awarded the licence at the reserve price. If the licence attracts more than one applicant it will then go to auction.

This process will continue until all the licences are sold or when the Government reviews bidding after 12 months.

This procedure was agreed following discussions with industry after the close of last November's auction.

Mr Alexander said:

"This move will help regional economies to benefit as businesses can take advantage of the opportunities broadband services offer.

It will allow small firms to have fast always-on access to the Internet and high capacity data transfer between offices and customers. This will have a real impact on the development of e-commerce and allow companies to have the competitive edge that is needed in such a fast-moving market.

It will also benefit consumers across the country. They will be able to access Internet services quickly and efficiently, with costs kept low".

Notes to editors:

1. Draft regulations will be published shortly. They will be made under section 3 of the Wireless Telegraphy Act 1998 to provide for this award process. There will be a period of 28 days for comments to be received. With the draft Regulations a draft notice will also be published for comment. The notice will set out the detailed arrangements for the award process.

2. The key features of the award process will be:

Licences will be open for bids initially for a 12 month period.

Applications will be invited for licences in specified regions, with bids at no less than the reserve prices.

The first application for a licence in a region will be publicised and other applications invited within 20 working days. If there are no competing applicants for any of the licences on offer in the region all applicants will be awarded licences, subject to pre-qualification and associated bidder checks.

If there are competing demands for a licence a simple multiple round auction will be held for all available licences in a region to determine which bidders will be awarded licences.

Unsold licences will remain available until the closure of the 12 month period for applications.

3. Companies interested in making a bid should contact: The Broadband Fixed Wireless Access Section, Radiocommunications Agency (0207 211 0324 or email BFWA@ra.gsi.gov.uk). Copies of the information pack are available on the Radiocommunications Agency website at www.radio.gov.uk

4. The Government auctioned three spectrum licenses in the 28GHz band in each of the 11 English regions, plus Scotland, Wales and Northern Ireland. The auction began on 10 November and ended on 20 November 2000.

5. The licences which remain unsold are:

Press Enquiries: 020 7215 5978
(Out of Hours: 020 7215 3234/3505)
Public Enquiries: 020 7215 5000
Textphone for those with hearing impairments: 020 7215 6740
Internet: www.dti.gov.uk

INFORMATION NOTE ON SECOND 28 GHz BROADBAND FIXED WIRELESS ACCESS AWARD PROCESS

The 28 GHz BFWA auction was held in November 2000. Sixteen licences were sold covering 7 of the 14 licence regions. The successful bidders were Broadnet, Norweb, Energis, Faultbasic, Chorus and Eircom. The Auction raised £38.16 million. 26 licences remained unsold at the close of the Auction. Regions in which no licences were sold covered most of the south of England (excluding Greater London), East Anglia, the East Midlands and Wales.

Since the end of the auction there has been significant interest shown, both by bidders in the Auction and others, in the unsold licences. The Minister has decided that these will be made available to companies that wish to exploit the opportunity to develop broadband services delivered over wireless. The proposal is to make them available at the reserve prices set for the auction. A company could place a bid when it decided market conditions were right. Its bid would be publicised and other interested companies could submit competing bids. If there were competing bids this will trigger a multiple round auction. If not the licence would be awarded to the company placing the bid. Licences will be open for offers from around the end of September. They will be available at the reserve prices set in last November's auction.

Overview of award process

The second award process is for the twenty-six licences (in ten regions) left unsold at the end of the auction. The licensing process is designed to be as simple as possible for potential applicants. Licences will be available for a period of up to twelve months and, unless there are competing demands for a licence, will be provisionally allocated to the first applicant. It is possible that most licence awards to be made on this basis. However, if there are competing demands for a licence, an auction will be used to allocate the available licences in the relevant region. Auctions for different regions may be run concurrently where this would suit bidders who would like to obtain licences in a number of regions.

Award Process - Description

Primary Award Stage

An earliest date for applications (End of September 2001) will be announced at the time of publication of the Information Memorandum in August. From that date, any interested company may apply for a licence, the application constituting a bid for a licence at the reserve price and including a 10% deposit. An application will trigger the start of a period of twenty business days during which further applications may be made for licences in the relevant region. If, at the end of that period, there is no more than one application for each of the available licences in that region, each applicant, subject to satisfactory completion of a qualification process, will be provisionally awarded a licence.

Multiple-round Auction Stage

If two or more applications are received for a particular licence in the region applicants will take part in a multiple-round auction. The bid of the initial applicant for each licence will be treated as the opening bid for the region. Other applicants may place bids at or above the minimum bid specified by the auctioneer. Unless a bidder holds the current highest bid he must submit a bid in each round or else withdraw from the auction. Bidding continues until no bid higher than the current price bid is submitted on any of the licences. Each licence is then provisionally awarded to the bidder who holds the highest bid for it at the close of the auction.

Award Stage

At the conclusion of the primary award or auction stage, successful bidders will have to notify the Agency of the existence of any pre-conditions to the award of the licence (for instance, shareholder or regulatory approvals, or the existence of an association with another successful bidder that had arisen after pre-qualification). If no such preconditions exist, the Secretary of State will grant the relevant licence to a bidder within 20 Business Days, and at that time the licence fee becomes due. If a pre-condition exists, the bidder will have 60 business days, or such longer period as the Secretary of State may decide up to a maximum of 180 Business Days) to satisfy the precondition

Further availability

Any licences in a region remaining unallocated after an award process will remain available until the end of the 12 month period.