Seventh Meeting of the Broadband Fixed Wireless Access Consultative Group Held at Wyndham House on 14 July 2000

Those present:

Dave Toman Chairman RA
Charanjit Ransi Acting Secretary RA

List of all those present at Annex A (10 Officials and 20 members)

Apologies were received from Mike Crowther (Kingston Comm) and Alan Penney (Telia).

I Agenda BFWACG(00)33

1. Mr Sonke added document BFWACG(00)34 to the Agenda - Indicative Timetable For 28 GHz Auction. The Agenda was agreed.

II Minutes of the sixth meeting on 9 June 2000 - BFWACG(00)32

1. A BFWA member considered the minutes of the last meeting did not reflect accurately the strong views expressed on the Agency`s proposals for licensing spectrum at 28 GHz, such as another BFWACG member's view that Ministers were not sufficiently briefed on the issues, and A BFWACG member's comments on the inconsistency with award processes in other European countries. This was supported by another BFWACG member.

III Matters arising

IV Indicative Timetable Indicative Timetable For 28 GHz Auction – BFWACG(00) 34

1. Mr Sonke presented the above paper outlining the Auction process for licensing 28 GHz spectrum :

• Regulations come into force and Notice is issued 18 August

• Submission of Applications 5 September

• Notification of successful pre-qualification 26 September

• Notice of Auction start 2 October

• Auction start 16 October

• Potential Auction finish and publication of winners 6 November

• Final date for award of Licences (after 60 Business Days) February 2001.

A BFWACG member expressed concern with the suggested date for accepting applications - 5 September, which would not be suitable because it was too close to the timing for the BT unbundling exercise, 1 September. Those companies who had an interest in DSL, would be pre-occupied with this exercise and would not be able to focus on the 28 GHz auction. The date was agreed between Industry & Oftel. Mr Sonke replied, he would consider moving the date for submitting applications to 12 September if there was sufficent support from members, but stressed that this would effect the subsequent timetable. A BFWACG member suggested a period of time to consider the feasibility of the dates. Mr Sonke agreed and asked for comments by 18 July. Action: All Members

2. A BFWACG member thought the 60 day back stop period for awarding licences was too long. Mr Sonke explained that it was the last date by which winning bidders would be expected to meet any pre-conditions attached to the grant of licences – in practice licences might be issued much earlier. A BFWACG member asked if a T Act Licence would be required before a BFWA licence. Mr Sonke said that this would be covered in the Information Memorandum

V. Auction Design and procedures – Draft Regulations, Notice And Licence

1. Mr Toman said Ministers were given a full and comprehensive review of the issues and how the auction should be conducted. The Department Of Trade and Industry Press Notice of 15 June reflected Ms Hewitts`s views. The Draft Notice & Regulations were placed on the Agency web-site on 19 June. Members were urged to comment by 18 July. The Agency would consider the comments received, and hope to lay the final regulations before Parliament by 28 July. Action: All Members

2. A BFWACG member asked for details on the I.T. equipment required for the auction and details on the use of encryption and authentication of the auction software. Mr Sonke advised members that a seminar had been planned for 20 July to address these issues. Members were asked to advise him of their availability. Mr Mason informed the group, the IT requirements for the auction would be covered in the Information Memorandum. An extract from the Information Memorandum would be posted on the Agency web-site immediatly to give an early indication of the hardware required. Mr Toman asked potential bidders to discuss details relating to software compatibility to enable data to be downloaded and merged into the bidders own software.

3. In response to a question from A BFWACG member, Mr Sonke confirmed the Telecom Code powers for bidders would be available on request, and covered in the Information Memorandum. A BFWACG member asked if the timetable for licensing 28 GHz spectrum is affected with the award process for licensing 3.4 GHz. Mr Mason replied the timetable would be co-ordinated across the frequency bands. Mr Wilson stated, there should be clear statements in the Information Memorandum on FWA opportunities in the narrow frequency bands. Mr Mason said the Information Memorandum would include a statement indicating the current position with these bands. Further information will be posted on the Agency web. In response to a question from a BFWACG member, Mr Sonke confirmed the Information Memorandum would include the Draft Regulations & Notice which members had been requested to comment on. Members would have the opportunity to submit further questions on the Information Memorandum: answers would be publicly available on the Spectrum Auction Site. Updated and additional information would also be posted on the site.

VI Publication of Information Memorandum

1. Mr Mason informed the Group that the Agency was aiming to publish the Information Memorandum on the web-site and in hard copy form by 21 July. It would comprise three volumes and would include the Draft Notice & Regulations. A BFWACG member was disappointed that the Information Memorandum was in production before the consultation period for the Draft Notice and Regulations had ended, so that members` views would not be taken into account.

2. A BFWACG member was disappointed with the rules relating to deposits and the simplified approach as addressed in The Notice, was anything but simple. He said he would like further clarity on the use the spectrum may be put to, also in his opinion the UIOLI clause was weak, the 10% of local units condition gives no indication of what service quality must be available to the 10% of local units. With regards to the Local Business Units database, it is not clear that it exists, ONS can provide data, which would be chargeable. A BFWACG member, questioned whether the service to 10% of Local units condition was achievable and did the models from KPMG support this. Mr Sonke replied, according to KPMG`s analysis, the targets are reachable. A BFWACG member expressed concerns with the rules relating to tie Rounds, particularly with the random method that would be employed to determine the Current Price Bidder, a BFWACG member sought clarification on what the random method would be. Mr Sonke stated that an electronic random method would be deployed.

3. A BFWACG member, expressed further concerns with the ratchet system adopted for additional deposits, she thought it was placing too much of an administrative burden for the bidders and would like the Agency to put into place, a system in which bidders would increase their deposits at pre-determined intervals, instead of at the start of each round. Prof Binmore said bidders are given the option, as to how much money they wish to put down for a deposit, they could put down a larger deposit to cover themselves in later rounds. They should determine, at the start of each day, the amount of deposit they would need to cover bids likely to be made that day. It was essential that deposits were high enough to discourage bidders from defaulting. A BFWACG member asked the Agency to check the level of defaults in the Swiss auction, which had deployed a system for collecting deposits, where they accepted one deposit early in the auction. The Swiss method for deposits, was a success because it was straight forward and simplistic. Mr Binmore said the Swiss, took a great risk by setting low deposits, which increased the risk of a bidder defaulting, we have to guard against anyone defaulting because it would effect all bidders and the auction process.

4. A BFWACG member asked, what criteria would the Agency use to judge whether the Auction had been a success? Is success, judged by the level of receipts? Mr Toman replied, from the out set, our objective has not been to maximise receipts, but to place the licences in the hands of those who valued the spectrum most. A BFWACG member said the definition for "BFWA" would be open to legal challenge – would the reference to "two-way communication links" exclude time division duplex technology? The term "On Demand" also needed explaining. Mr Sonke replied that the intention is to ensure that customers wanting a level of service requiring 2 Mbps should be able to receive it when they wanted it, i.e. "On Demand" . A BFWACG member, said that it depends on what level is there intention to operate it at. Mr Sonke said the Agency perceived it as the minimum level at which to receive BFWA services. Mr Toman said that we will look into these matters further and would welcome comments in writing. In response to a question from a BFWACG member on the purpose of the Information Memorandum, Mr Toman replied that it was a compendium of information that bidders should find relevant to enable them to formulate their bids.

5. A BFWACG member asked in the Schedule, whether the definition of "Premises" be re-worded as Customer Location, the term as it stands may exclude services in temporary locations, which may not qualify as "premises". Mr Toman said, we would examine this with our Lawyers. Action: Agency

VII Update on the 40 GHz Market – results KPMG market modelling

1. KPMG presented slides on their preliminary findings of the 40 GHz market, the objective was to assess whether there was a viable market. The slides would be available on the Agency’s website. The modelling concluded that the residential entertainment market under both low and high case scenarios appeared difficult to realise significant profits, given cost assumptions. However the results of the study indicated, there would be substantial business telecom revenues. Mr Toman considered it difficult to deliver 40 GHz to the home until equipment costs fell. The Agency would have to consider whether to delay the award of licences until there was a viable residential market. A BFWACG member said manufacturers were developing systems for the residential market and it would not be a good idea to delay licensing . A BFWACG member said bidders plans for 40 GHz would have an impact on business plans for 28 GHz. It would be useful if members were given more information of the award process. Mr Mason said the plan is to license 40 GHz in the first quarter of next year, at present the Agency is not in a position to determine the best approach to awarding licences, or the number of regions. A BFWACG member asked if the Agency would consider making the licences exempt, it would speed up the process. Mr Toman said all suggestions would be considered, including licensing part of the spectrum as planned and holding the rest until later. We would hope to inform members of the proposals for licensing 40 GHz in September, after seeking advice from Ministers as to how best we should proceed. Mr Toman called for member`s views on 40GHz licensing issues

VIII Report of Technical Group meeting held on 14 June 2000

1. Mr Nixon reported that further work on adjacent region co-ordination had been discussed. The work addressed three areas, these were a reduced interference limit, the affect of varying BS antenna down-tilt and the affect of varying the BS sector widths. The reduced interference limit produced a consequent reduction in the power flux density trigger levels and BFWAtg members were asked to decide on which interference limit was most appropriate. The work on antenna down-tilts showed that as long as an 8° or more down-tilt is used the interference caused will be within desired limits. The affect of varying the sector width did not increase the interference beyond acceptable limits as long as the co-ordination requirements were satisfied.

Mr Nixon added that other issues discussed were the outcome of the WRC 2000 on 40GHz issues (reported at the last BFWACG) and a proposed update to the 40GHz frequency allocation being developed within CEPT PT SE19. Mr Nixon remarked that the first draft of the UK 28GHz Interface Requirements document would be presented at the next BFWAtg on 2 August ’00.

Date of Next Meeting (provisional)

The date of the next meeting was provisionally set for 11 August 2000 at Wyndham House.

Annex A

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