1 - EXECUTIVE SUMMARY

1.1 Introduction

This Memorandum provides information for those parties wishing to apply for a Licence for spectrum to establish systems for the provision of BFWA services at 28GHz in the United Kingdom.

In particular, this Memorandum:

• summarises the factors which Recipients need to consider to establish their eligibility to apply for any available Licence;
• summarises the rules and timetable applicable to the award process; and
• provides some background information on BFWA services, the UK telecommunications market and the regulatory environment.

Recipients considering submitting applications for any Licence should note the following key issues:

• broadly, there are no technical or financial pre-qualification requirements for applying for a Licence other than the provision of a deposit. Details of ownership structures and confirmation of compliance with the rules of the award process must also be provided. Applicants must be a single body corporate but need not be telecommunications companies.
• a number of Licences authorising use of spectrum for BFWA in the 28 GHz frequency band have been issued following an Auction Process held in November 2000. Twenty-six Licences remain available for issue, subject to the terms of this Memorandum. The Licences, issued under the WT Acts, shall permit the use of specified spectrum only in the Region specified in the Licence. Furthermore, the Licences restrict the use of spectrum to a particular purpose, namely to facilitate the provision of a broadband connection only between an end user and a telecommunications network.
• successful applicants will be subject to a roll-out condition to ensure the timely provision of broadband services to the end user (see Section 2.2.1.2).

Further details are provided in this Memorandum.

Applicants should note that a Telecommunications Act Licence and, in some cases, a Broadcasting Act Licence may also be required.

Recipients of this Memorandum who intend to apply for Licences should note that the information contained in this Memorandum does not purport to be complete. The intention of this Memorandum is to bring to recipients' attention a number of key issues. Recipients will need to undertake their own detailed investigations of the issues raised in this Memorandum and any other issues they consider to be relevant.

Recipients should note that the Regulations and the Notice are not yet in final form. At the time of publication of this Information Memorandum, the Regulations were undergoing statutory consultation before being made and laid before Parliament. The Notice will only be issued once the Regulations have come into force, which is expected to be by mid-October 2001. The Agency expects that the Notice will remain materially unchanged from that shown in the draft Notice at Appendix H in Volume II of this Memorandum. Copies of the Regulations and the Notice in final form will appear on the Agency website when available. Recipients should also note that only the Regulations and the Notice have statutory effect. Accordingly, in the event of any difference between the procedures set out in this Memorandum and the provisions of the Regulations and the Notice, the latter are definitive.

1.2 BFWA and policy background

1.2.1. Overview of BFWA

There is an increasing demand for interactive broadband services that is expected to grow dramatically over the coming years. Radio links can offer quick access to these services and more choice and benefits for customers and the economy. We expect companies to be able to offer a wide variety of services to end-users such as:

• fast always-on access to the Internet;
• high capacity data transfer;
• video conferencing;
• video on demand/near video on demand;
• leisure services (interactive games and audio);
• on-line banking and shopping;
• LAN access; and
• web serving.

Broadband services are usually considered to be those offering data rates in excess of 2 Mbits/sec. The definition of BFWA in the WT Act Licence reflects this: it includes the stipulation that data may be transmitted and received over a BFWA system at rates of at least 2 Mbits/sec on demand. This does not preclude the provision of services at lower data rates but it does mean that if an end user requires services at this data rate they must be available to him.

1.2.2 BFWA technology

A number of technologies covering both equipment and antennas are being standardised in Europe to provide BFWA systems within the framework of the European Telecommunications Standards Institute (ETSI). Both co-existence (i.e. no common air interface) and interoperable (i.e. common air interface) standards are being developed within ETSI. In the rest of the world other fora are also developing standards for BFWA technologies.

BFWA technologies using the following different access methods are being standardised within ETSI:

• Frequency Division Multiple Access (FDMA);
• Time Division Multiple Access (TDMA);
• Code Division Multiple Access (CDMA).

Traditionally, the co-existence standards being produced by ETSI have catered for a particular technology in terms of both architecture (point-to-multipoint) and duplexing method (frequency division duplexing). However, developments in Fixed Wireless Access (FWA) technology and deployment scenarios have resulted in work on-going within ETSI to address how the standards can be made applicable to these developments. Preliminary conclusions are that no additional parameters are required and the standards should "remain silent", where possible, on architecture and duplexing method. However, it is recognised that new spectrum engineering issues will need to be resolved with regard to technology developments co-existing in adjacent frequency spectrum.

In the context of the Agency approach that licences be technology neutral, and the developments in ETSI standards becoming generic in architecture and duplexing method, Applicants will not be required, prior to applying, to declare the technology they will use if successful in obtaining a Licence.

1.2.3 Other fixed broadband access technologies

Businesses, particularly those that are small or are outside large city centres, currently have limited choice for local broadband access. For larger companies in urban areas, fibre/co-axial cable will be the technology of choice. However, several alternative technologies exist for providing broadband local access. BT is currently rolling out ADSL over its existing local access network but technical constraints are such that services or sufficient capacity may not be available to all customers.

Local Loop Unbundling (LLU) is enabling other operators to upgrade BT's local loop by placing Digital Subscriber Line (DSL) technology in the local exchange and at customer premises. The UK cable network is highly advanced with many systems being both digital and two-way. Nevertheless, costs are such that cable operators are not planning to provide broadband two-way services to the less urban areas and rollout has focused on homes rather than business premises.

Fibre, xDSL and cable networks all provide alternative broadband local access. Other technologies are also available such as satellite (VSAT type) services and several other broadband satellite services are planned. Another technology, similar to satellite, known as HAPs or High Altitude Platforms, have also been discussed, but are not currently expected to reach the market for several years.

1.2.4 Other fixed wireless access technologies

There are a number of licensed FWA operators in the bands between 2GHz and 11GHz. Data rates for FWA systems are likely to be lower than those offered by BFWA systems. There is continuing work to optimise remaining opportunities in these bands and further information is available from the Public Fixed Wireless Access (PFWA) section of the Agency website. A consultation document concerning public use of de-regulated spectrum, including the 5GHz Band, is due to be published by the Agency in September 2001. A fuller description of FWA bands, along with other spectrum issues, is contained in Appendix A to this Memorandum.

1.3 The Licences

The Government has decided to allocate WT Act Licences through an award process which is detailed in this Memorandum. Drafts of the Regulations and the Notice under which the award will take place are at Appendices G & H. The Government made available three 15-year WT Act Licences, each of two by 112MHz, in each of eleven English licence regions, and in Scotland, Wales and Northern Ireland. In the Auction which took place in November 2000, 16 of these Licences in 7 of the 14 Regions were sold, the remainder are available for applications (see Figure 1.2). The Government has set a minimum price (the "Reserve Price") for each WT Act Licence. The Reserve Prices for each of the Regions (which remain unchanged from last year's Auction) are:

For the information and guidance of potential Bidders, the Radiocommunications Agency sought information from the Department for Environment, Transport and the Regions (DETR) [now the Department for Transport, Local Government and the Regions (DTLR)] for a breakdown of these regions at borough and authority level. A list of the counties and local authorities with unitary status for the information and guidance of potential bidders is on our website www.radio.gov.uk under "Broadband Fixed Wireless Access". It is intended as a helpful source of reference for companies. Companies are advised to seek advice from the Agency if in any doubt.

BFWA 28 GHz LICENCE REGIONS (coloured regions are those where one or more licences remain available)

Figure 1.2

1.4 Regulatory and associated policy issues

1.4.1 UK background

The UK Government attaches great importance to the further promotion of competition in the provision of telecommunication services to end-users. It is therefore keen to encourage market entry, sustainable competition and innovation. This is reflected in the objectives for the award of BFWA Licences, as announced by the then Minister of State for Small Business and E-Commerce, Patricia Hewitt MP, on 14 January 2000:

• to secure the timely and economically advantageous development and sustained provision of BFWA services throughout the UK, for the long term benefit of UK consumers and the national economy;
• to utilise the available BFWA spectrum efficiently;
• to promote early and effective competition for the provision of broadband access services; and
• subject to the above objectives, to design a licensing award procedure which is best judged to realise the full economic value to consumers, UK industry and the taxpayer of the spectrum.

1.4.2 The Government's broadband strategy

In February the Government published its broadband strategy, UK online: the broadband future, which committed the Government to ensuring that the UK has the most extensive and competitive broadband market in the G7 by 2005. The report announced a number of actions to help achieve this goal:

• A £30m fund to allow the Regional Development Agencies (RDAs) and devolved administrations to pilot innovative schemes for extending broadband networks into areas which are less likely to be commercially attractive. This fund will open for bids in October 2001.
• More effective use of the public sector's own demand for broadband. In May 2001, Patricia Hewitt announced a major study to develop detailed plans for aggregating broadband procurement in ways which would have maximum impact of the availability of broadband to households and businesses in rural and other ‘hard to reach' areas. This study will also look at measures the Government could take to share with industry the commercial risk of rolling out broadband networks in these areas. The report from this study will be delivered to Government in September 2001.
• A programme of research into the broadband market to inform decisions about further Government intervention in the broadband market.
• A Broadband Stakeholder Group, made up of key players from both public and private sector, to advise Government on further development of the broadband strategy. The group met for the first time in April 2001 and will deliver its first report to Ministers in September 2001.

1.4.3 The Government's targets on Internet access

The Government's overall aim is to make the UK the best place in the world for e-commerce. Access is an essential part of this; e-commerce will not happen unless individuals, businesses and organisations have good access to affordable and easily used technology.

The Government is committed to ensuring that everyone who wants it will have access to the Internet by 2005.

The awards of BFWA spectrum are an integral part of making the Internet more accessible through a range of different mechanisms to give more people better connections with improved online function.

The Government is taking action to increase Internet access in the home, at work and in the community:

At Home:

• Encouraging employers to provide PCs and Internet access for home use.
• Low cost recycled PCs for low income families: so far 25,000 have been allocated.

At Work:

• UK online for business is promoting the benefits to employers of having all employees with Internet access.

In the Community:

• A network of 6,000 UK online centres by end 2002 to provide easy Internet access in the community. Sited in a variety of locations from libraries, cafés and pubs, the centres will target groups least likely to have access to the Internet such as older people, the disabled, single parents and people on benefits.
• In seven Wired-up Communities pilot areas, located in some of the most deprived and isolated communities in the country, all homes and schools are being connected to the Internet. A community portal will bring together relevant online content and will enable the creation of local online content.

1.4.4 European background

Spectrum for BFWA at 28GHz is taken from allocations identified at an international level for this purpose in the Table of Frequency Allocations of the Radio Regulations. These identify the frequency band 27.5-29.5GHz allocated to Fixed Service. This international identification of spectrum is implemented within Europe through the ERC of CEPT, through a series of ERC Recommendations and Decisions. ERC Recommendation T/R13-04E recommends the use of this band along with several others, as preferred for FWA. The international allocation tables also show the band allocated to other services including, amongst others, the Fixed Satellite Service.

ERC Recommendation TR/13-04E identifies a number of preferred frequency bands for FWA in Europe. Within Europe it is recognised that there may be some difficulties for both the Fixed Service and the Fixed Satellite Service to share the same spectrum for similar high density applications. As a result an ERC Decision (ERC/DEC/(00)09) has been approved and clearly designates parts of the band 27.5-29.5GHz for terrestrial fixed service use including FWA, high density fixed satellite service use and a conditional part which may be allocated to either service on a national basis. The ERC decision is available from http://www.ero.dk/documentation/docs/docfiles.asp?docid=1459

The spectrum to be licensed in the award process when taken with the inter-operator guard bands located between the frequency blocks, falls entirely within that designated for fixed service use by ERC Decision (00)09 and represents the total bandwidth currently available. Further details are provided in Section 3.2 and Appendix A.

1.4.5 Infrastructure sharing and planning

The Government strongly encourages network operators to share masts and/or sites where possible in order to minimise the environmental impact of networks. This can also reduce the cost of deploying a network.

Site sharing arrangements should be the result of commercial agreements between the owner of the site and all sharing operators.

1.4.6 Health issues

There is public concern over exposure to electromagnetic fields (EMFs). Recipients will be expected to make their own judgements on this issue and successful Bidders should comply with all appropriate guidelines, recommendations or other standards as appropriate. Recipients should note Section 3.4.3 which describes the current situation as regards health and wireless technologies.

1.5 The Licence award process

The licensing process is designed to be as simple as possible for potential applicants, while fulfilling the objective of efficiency in awarding spectrum. The Licences will be available for purchase over a period of up to 12 months from mid-October 2001 and will be provisionally allocated on a "first come, first served" basis (the opening date for applications will be published on the Agency website by the end of September 2001). However, if there are competing demands for any Licence, then the Bidders for all Licences within that particular region will participate in a Multiple-round Auction stage. In greater detail, the process is as follows:

1.5.1 The Application stage

From mid-October 2001, any interested company can submit an Application Form for a Licence, containing details of their company structure and providing supporting information (principally on group structure and directors), together with a deposit of 10% of the Reserve Price of the Licence in question. This will be treated as a bid for that Licence at the Reserve Price and will be taken as a commitment to accept the Licence at that price should it be offered to that company during the award process.

The first Application for a Region will trigger, for that Region only, the start of a period of 20 Business Days (excluding Bank Holidays and weekends) from the date of publication of details of that Application on the BFWA pages of the Agency website. During this period, subsequent applications for Licences within that Region may be submitted by any other Bidder. Any body corporate may make an Application in accordance with Part 2 of the Notice. Bidders are neither required to pass a technical test nor to provide details of the services they intend to offer. Details of any subsequent Application received by the Agency, will be published on the Agency website.

1.5.2 The Pre-qualification stage

The Secretary of State will consider all Applications as detailed in Section 4.5. In particular, she will need to ensure that any Bidder is not a Candidate in relation to any other Bidder or Existing Licensee in the Region for which it has made its Application.

If the Secretary of State decides that any Bidder is not a fit and proper person to hold a Licence - or that the grant of a Licence to the Bidder would be prejudicial to the interest of national security - then that Bidder will not pre-qualify (see Sections 4.3 and 4.5 for details).

No Bidder may be associated with another Bidder or Existing Licensee in the same Region.

Following the Pre-qualification Stage, the process will move either to the Primary Bid Stage or to a Multiple-round Auction Stage, depending on whether there are competing bids for any Licence in that Region.

1.5.3 The Primary Bid stage

If, by the end of the Pre-qualification Stage following the first application for a particular Licence, no more than one Bidder has applied for a particular Licence in a Region, each qualifying Bidder will be granted the provisional award of a Licence at the Reserve Price for that Region.

1.5.4 The Multiple-round Auction stage

If two or more Applications are received in respect of any Licence, irrespective of whether there are other Licences available in that Region, then after the close of the application period all qualifying Bidders will participate in a Multiple-round Auction stage of all available Licences for that Region.

In respect of each Licence, the initial Bidder's bid will be treated as the opening bid for that Licence, and will stand as the Current Price Bid on the Bidder's choice of Licence in the first round. Other Bidders may place bids for any one Licence available in that Region. At the end of a round the Bidder making the highest bid on each Licence is declared. Each Bidder must bid at least once and must place a single bid in each Round, except when being the Current Price Bidder on any Licence. A Current Price Bidder is committed to then taking the respective Licence at the price bid, unless overbid in any subsequent round. A participant who declines to bid withdraws from the Multiple-round Auction. When all remaining active Bidders are the Current Price Bidders on separate Licences, the Multiple-round Auction is concluded and each Current Price Bidder is granted the provisional award of a Licence.

The actions available in a Round are:

• to bid; a Bidder may only bid on one Licence during each Round. If the relevant Licence has not previously been the subject of a bid, the bid must be at or above the Reserve Price. The Secretary of State will specify a minimum bid for each Licence in each Round. A Bidder holding the Current Price on any Licence for a previous Round is permitted neither to Bid nor withdraw;

• to withdraw; a Bidder who is not a Current Price Bidder may withdraw from the Multiple-round Auction by declining to bid further. A Bidder who has withdrawn is not allowed to rejoin at a later stage.

Identical Bids will be treated as detailed in Section 4.7.2.

1.5.5 The Grant stage

Once the award process has finished for any Region, each successful Bidder will be provisionally awarded the Licence which he has been allocated via the award process. Those Bidders must notify the Agency of the existence of any pre-conditions to the award of the Licence (for instance, shareholder or regulatory approvals, or the present and impending existence of an association with another successful Bidder or an Existing Licensee in the same Region). If no such pre-conditions exist, the Secretary of State will grant the relevant Licence to a Bidder within 20 Business Days (on a date to be notified to the Bidder by the Secretary of State). Simultaneously with the grant, the Bidder will pay for the Licence. If a pre-condition exists, the Bidder shall have 60 Business Days, or such longer period as the Secretary of State may notify (up to a maximum of 180 Business Days) to satisfy or waive the pre-condition.

1.5.6 Payment terms

Successful Bidders can choose to pay the Licence fee by either paying the full amount on grant of the Licence or by paying in instalments (see Section 4.8.2 for further details).

1.5.7 The timetable

The diagram on the following page gives a representation of the licensing process. The time required at certain stages, such as for completing the necessary checks on Bidders, will vary between situations and these timings are therefore indicative only. A provisional timetable for the award process is given in Section 4.2 of this Memorandum.

A company applies for a licence in a region and lodges a deposit. This triggers the start of the licensing process in that region.
A period of 20 days occurs to allow other companies to apply for any of the Licences in that region. Details of all the applicants are posted on the Agency website soon after they are lodged.
Day 20 Applications close in that region. The RA initiates ownership checks on applicants.
Have two or more companies applied for the same Licence?		Licensing process moves to Multiple-round Auction stage
Day 30+ Announcement of award of licence(s) in that region.
Day 40+ Payment and issue of Licence(s).

1.5.8 Application instructions, enquiries and further information

Companies wishing to apply for any available Licence should refer to Chapter 5 of this Memorandum and the provisions of the Notice. Contacts for enquiries or further information are provided in Chapter 6.

Attention is in particular drawn to the rules in Part 7 of the Notice regarding collusion and confidentiality of information. Bidders should familiarise themselves and ensure their compliance with these rules, and should note that breach of these rules by themselves or members of their Candidate Group may lead to their exclusion from the Auction.

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