A Summary of the Consultation of 19 April for the 28GHz licensing proposals

Broadband Fixed Wireless Access

A summary of the consultation of 19 April for the 28GHz licensing proposals.

Sixteen responses were received, a number of which were marked as confidential. To account for these, and to ensure fairness to all respondents, the following summarised comments are not attributed to any one company.

Auction vs. comparative selection. A number of responses were strongly opposed to use of an auction method because of fears that strategic or anti-competitive bidding might drive prices up and discourage smaller companies from bidding. Some felt that the issue, which had been raised previously, had not been given due credence by the Government. However other responses noted that, when coupled with an appropriate, objective "use it or lose it" condition in the licences, there would be no advantage to be gained by speculative bidding and therefore found the auction proposal acceptable.

The Government view remains that an auction method as announced by Ministers is the best way both of putting BFWA spectrum into the hands of those who will value it most, and of setting that value in terms of market affordability. There should be no advantage in bidding a higher price for a licence than can be recouped by provision of commercial services over the BFWA network to be installed.

Eligibility to bid. Some responses commented that companies who already provide broadband services by other means, notably British Telecom via ADSL and cable operators over their fixed networks, should not be allowed to bid as a spectrum award would give them a dominant advantage in the market. There were some suggestions that one or two licence packages should be reserved for only companies with no pre-existing mechanism for delivery of any broadband service and there was also one suggestion that an allocation be reserved for an infrastructure provider rather than operators.

In practice, BFWA has potentially the capability to deliver a wider range of services and to deny any potential player the opportunity to develop these could be contrary to the EC Licensing Directive. The Government’s intention is therefore not to restrict or exclude any operator or class of operator from bidding.

Number and size of licences. Some responses called for some smaller spectrum packages to be offered to encourage smaller investors, dividing one or two of the 112MHz packages into 56MHz ones or even a mix of 56MHz and 28MHz packages, and assigning the additional 56MHz package likely to become available as a separate licence rather than as guard bands. However several responses expressed agreement with the proposal of three 112MHz packages, with the extra 56MHz either offered as a separate package or divided between the three rather than deployed as guardbands. There were calls generally to clarify the status of the potential extra 2 x 56MHz allocation as soon as possible, and to state any co-ordination issues, if any, which might apply in the band.

The Government’s position is that assignments of 2 x 112MHz provide sufficient capacity for full deployment of broadband services and sufficient flexibility to work around and minimise inter-operator co-ordination difficulties. If smaller assignments are considered, then a degree of flexibility is lost to the extent that particular technologies could be excluded in the interests of minimising the impact of co-ordination. The Government is minded to apply the additional 2 x 56MHz (if available) as 28MHz guardbands between the three licences in order to help strike a balance between maximising usable spectrum with a minimum of deployment constraints against the need to ensure equitable co-existence between competing operators. It considers too that since the spectrum is to be made available for broadband applications, dividing the spectrum too narrowly would run contrary to this objective.

A question was asked about FWA spectrum allocations in the lower frequency bands between 2GHz and 10GHz. A position paper is being prepared and will be made available on the website shortly, also details will be included in the information memorandum. One licence of 2 x 17MHz in the 3.4GHz band and one of 2 x 30MHz in the 10GHz band should be offered by the end of 2000, and other opportunities for FWA assignments are also under consideration.

Licence Areas. Several responses called for at least one UK national allocation and one suggested that if not, then one covering all English regions should be considered. Most said that if regions were devised, the fewest possible would be preferable to ease the co-ordination between operators at boundaries. Boundaries should be planned to avoid as far as possible populated areas and as long as individual areas are viable, there is no need to balance the respective areas as the auction method would determine the appropriate pricing in each.

The Government has decided to offer licences on a regional basis. With regard to responses received and further detailed work by the marketing consultants KPMG, it is now thought that 11 English regions plus 3 national territories may be offered, subject to agreement of Ministers. Companies wishing to offer a wide or national service will be able to bid in adjacent regions in order to secure contiguous coverage.

Restriction on Use of Spectrum. Some responses objected to the restriction of the spectrum to only BFWA provision on the grounds that it might restrict legitimate commercial strategies. One argument was that to permit its use for other activities such as infrastructure backhaul for 3G cellular services would encourage its early development on a wide scale. It was pointed out that the inclusion of a minimum data rate requirement in the "use it or lose it" condition would guard against it being diverted to other uses entirely. One response suggested restriction on use for backhaul should only apply in urban areas to encourage roll-out in rural areas.

The Government accepts that BFWA technology might comfortably support a range of end-user services and as such might effectively become an infrastructure component for some. However, there is a danger that this spectrum could be seen as an opportune provision to support other networks and services and that its development as such might discourage potential broadband providers from bidding. There is danger too that the price of the spectrum could be driven up beyond affordability for broadband use alone (especially for smaller bidders) which would run counter to the objectives. The Government is therefore minded to impose some restriction on the uses to which the spectrum may be put.

Technology to be used. One response asked if there would be any restriction on the technology allowed, specifically the ‘Mesh’ architecture for a network. The Government confirms that it would not seek to restrict any spectrally efficient or innovative technology, subject only to sharing and compatibility considerations.

Unsold Licence Packages. Some responses confirmed the advice of auction designers that unsold packages should not be sold cheaply after the event and should not be re-offered for a considerable period of time, otherwise the award process would be undermined.

Auction Design. Two responses suggested that the number of regions where a bidder wanting to provide national coverage would need to be active would limit the number of rounds per day if bidders were to have adequate time to consider strategies.

Radiocommunications Agency

6 June 2000

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