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Response to "Proposals For The Licensing Of Radio Spectrum At 28 GHz" - Thus |
Cliff Mason
Broadband Fixed Wireless Access Section
Radiocommunications Agency
11B/21D Wyndham House
189 Marsh Wall
London E14 9SX
17 May 2000
Dear Cliff
Proposals for the licensing of radio spectrum at 28 GHz
Thus welcomes the opportunity to comment on the above proposals. We agree with the main thrust of the analysis in this paper. There is growing demand for broadband access, both residential and business, and the proposed BFWA services would be an appropriate use of this spectrum. We also agree that an auction is the most efficient and fair way of assigning this spectrum, given the large number of companies who will potentially be interested. We offer the following detailed comments.
The KPMG study commissioned by the RA has concluded that the market for BFWA services may well be a ‘niche’ market, concentrated in suburban areas. This being the case, we feel that it would be undesirable from a national economic perspective, to prescribe too tightly the applications for which licensees may use the spectrum. The rationale for some form of constraint is understood. Without it, operators may simply decide to use the spectrum as a substitute for fixed infrastructure links, denying the economy the benefits of increased competition that would result from the new BFWA services. However, it would be unfortunate if operators were not able to use the spectrum for other purposes in areas where BFWA services were not economic, since this would enhance the overall viability of the deployment and yield greater economic benefit.
The RA is proposing to award the licence in 3 blocks of 2x112 MHz, but invites comments on whether different sized blocks might be preferable, with one or more packages reserved for new entrants. If no restrictions are placed on who may bid, there is a risk that operators with existing market share may use their financial power to obtain spectrum which they are then slow to use, in order to keep their competitors out of the market or delay their entry into it. We propose that if 3 licences are awarded, two should be reserved for new entrants (ie not BT or cable franchisee), to maximise the chance that at least one of these new entrants will be successful in providing sustainable competition. If this is not possible, then it may be appropriate to consider awarding 4 licences, two of 2x112 MHz and two of 2x56MHz.
We understand the Agency’s wish for a ‘use it or lose it’ clause. However, given that companies will potentially be paying significant amounts of money at auction, the rules under which such a clause would be exercised have to be made clear. For example, would the operator be entitled to a refund of some or all of the licence fee? How will usage be measured, by number of subscribers, by number of base stations deployed, by area covered? And at what times? This will have a critical effect on companies’ valuations of the spectrum going into the auction. Proposals should be published and comments invited from the industry well in advance of the auction process.
Yours sincerely
Richard Sweet
Regulatory Manager
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