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The Licences |
2.1.1 Number of WT Act Licences to be auctioned
There will be three WT Act Licences available in each of eleven English licence Regions and in Scotland, Wales and Northern Ireland.
2.1.2 Licensing of BFWA operators
A BFWA operator, who must be a body corporate, will require licences under both the Wireless Telegraphy Acts and the T Act in order to provide radio-based services commercially to third parties. Depending on the content of the services to be offered, it is possible that a licence under the Broadcasting Acts may also be required.
The Wireless Telegraphy Acts require that the use of radio equipment and frequencies must be either licensed, or covered by a specific exemption from licensing. A WT Act Licence will specify the radio frequencies of operation, the technical basis for the operation of a system, the region(s) of operation and the legal obligations and constraints on the operator including the circumstances in which the Secretary of State might seek to vary or revoke the licence authority. The WT Act Licence is detailed in Section 2.2.
The T Act deals with issues affecting the provision of telecommunication services. Successful bidders who already hold a PTO Licence under the T Act will not require a new T Act Licence to offer services over their BFWA systems though others will require a T Act Licence before commencing commercial services. In addition to regulation, the T Act Licence may also confer certain authorities in relation to prior approvals procedures for telecommunications code system operators under the Town and Country Planning (General Permitted Development) Order 1995 (SI 1995/418). The T Act Licence is detailed in section 2.3. The Secretary of State intends, subject to a statutory public consultation, to award a T Act Licence to each successful Bidder who requires one. For further details (see Section 2.3).
The cost of each WT Act Licence will be the highest price bid for it at Auction. The cost of a T Act Licence is detailed in Section 2.3.11.
The Broadcasting Acts provide for the regulation of certain television, data, multiplex and sound services if they are intended for simultaneous reception in two or more places by people who do not share a business interest. If an operator is to include such services as part of his package of offerings, he may require a licence from either the Independent Television Commission or the Radio Authority or both as appropriate in order lawfully to carry the programme content over the BFWA system. The Broadcasting Acts are detailed in Section C2.4 and it is the responsibility of each Bidder to consider whether he additionally requires a licence under these Acts.
2.2.1 Summary of terms
The WT Act Licence (see template attached at Appendix (J) largely follows the standard format for licences issued under the Wireless Telegraphy Acts and contains a number of conditions which are common to all such licences. The WT Act Licence authorises the establishment and use of radio equipment in the UK and prescribes the conditions under which that equipment may be used to provide BFWA services on a regional basis. The WT Act Licence will place certain obligations on the licensee. These cover matters such as the construction and operation of the radio equipment, a "use it or lose it" provision, and the mechanisms for payment of fees. The WT Act Licence also defines the limits of the Secretary of State's powers in relation to variation and revocation of the WT Act Licence, for example when dealing with interference matters or in a state of emergency. The WT Act Licence does not prescribe particular types of service and allows wide scope for licensees to develop their businesses by creating and responding to market demand.
2.2.2 Revocation
The circumstances under which a WT Act Licence may be varied or revoked are set out in paragraph 3 of the template in Appendix (J). Where the Secretary of State proposes to vary or revoke a WT Act Licence, he must follow the procedure in the Wireless Telegraphy Acts. He must give notice to the licensee allowing representations within a period of at least 28 days. If the proposal is as a result of a breach of a term of the WT Act Licence, the notice will state that the proposal will be withdrawn or modified if the breach is remedied within that period. The Secretary of State will confirm, modify or withdraw the proposal and give notice of his decision to the licensee within a further period of 28 days from the time limit specified for representations before such revocation or variation.
If a WT Act Licence is revoked, varied or surrendered, no refund will be made except at the discretion of the Secretary of State, in accordance with the Regulations. Refunds will only be made in exceptional circumstances.
2.2.3 Duration
The WT Act Licence will remain in force until 31 December 2015 unless earlier revoked by the Secretary of State (see Section 2.2.2 above), or surrendered by the licensee.
2.2.4 "Use it or lose it" provision
Schedule 1, paragraph 4 of the draft WT Act Licence contains a section titled "Special Conditions relating to the operation of the Radio Equipment". Its purpose is to require the timely provision of broadband services to end users and to provide for the Secretary of State to have grounds to review the requirement and any perceived failure to comply, and to recover part or all of the spectrum if it appears to him that consumer interests are not being met. It is not intended to set commercial targets for the operator. It does allow that in circumstances where an operator fails to roll out a minimum service within the timescale, the Secretary of State will have grounds to consider whether such failure may be justified and amend the condition. However, recognising that unsuccessful Bidders in the Auction will have been denied the opportunity to provide a service, where there is no such justification he may recover the Spectrum and, if appropriate at that time, re-offer the allocation to other potential licensees.
2.2.5 Alternative uses of BFWA spectrum
Use of the BFWA Spectrum in the 28GHz band to provide other fixed services will only be permitted when such use is in direct support of the provision of BFWA services and so long as it is in line with the technical parameters and co-ordination requirements for BFWA set out in the WT Act Licence.
The Spectrum is being offered for a particular purpose, namely to facilitate the provision of broadband services to end-users. It is implicit that the successful Bidders who obtain WT Act Licences will deny unsuccessful Bidders the opportunity to provide such services. It is not intended therefore that this Spectrum should be permitted to be diverted for other purposes such as providing infrastructure links to support other telecommunications networks.
2.2.5.1 Spectrum for BFWA infrastructure
Licensees will require means of supporting their BFWA operation with back-haul connections. These can be provided by a number of means including microwave point-to-point links. In some circumstances there may be an opportunity for an operator to provide these links from within his BFWA assignment as set out in Section 2.2.5 but if this is not possible then use can be made of the various UK fixed link frequency bands detailed in the RA Information Sheets RA143 and RA164. Licences for use of these frequencies should be dealt with by the usual fixed link application (information sheet RA8) and licensing process.
2.2.6 Ability to assign licences under the Wireless Telegraphy Acts
At present, licences issued under the Wireless Telegraphy Acts are not assignable. The rights and obligations may only be transferred if the Secretary of State revokes the licence and issues a new licence under the Wireless Telegraphy Acts to the new operator. The exercise by the Secretary of State of his discretion to do this would depend on the circumstances and should not be taken for granted in any particular case.
Assignment of any associated T Act Licence is dealt with separately in Section 2.3.
2.2.7 Trading of licences under the Wireless Telegraphy Acts
During the passage of the Wireless Telegraphy Act 1998 as a Bill through Parliament, Ministers indicated that they saw potential advantage in introducing trading in licences under the Wireless Telegraphy Acts as a development of spectrum pricing. On 8 October 1998, the Agency published a consultative document, "Managing Spectrum through the Market". This document and the responses to it (except where confidentiality was requested) are available on the Agency website.
The introduction of full spectrum trading would require amendments to be made to the Wireless Telegraphy Acts as well as changes to the Licensing Directive. The Government announced on 25 May 1999 that, in light of the favourable response to the consultation, the Agency would be consulting further on detailed proposals to introduce spectrum trading, subject to the necessary legislative changes being made. On 31 March 2000, the Agency published the year 2000 edition of the UK's Spectrum Strategy document (a copy of which is available on the Agency Website). This document discussed further the possible introduction of spectrum trading subject to the necessary changes in EU and UK law.
On 27 April 2000, the EC Commission published a working document setting out elements under consideration for a new regulatory framework for electronic networks and services. This included a proposal to permit, but not require, Member States to allow spectrum rights to be traded subject to notification of, and supervision by, the national regulatory authority.
This would allow full spectrum trading to be introduced by Member States. It is not possible to predict with certainty the exact timing, although this is unlikely to be before 2003 given the timetable for the European review, or the precise form that any amendment on spectrum trading will take, including any restrictions that might be imposed.
Were spectrum trading to be introduced, the Government's current thinking is that existing licences issued under the Wireless Telegraphy Acts, including those to be auctioned, should be varied to be made assignable through secondary trading in the same way as licences issued after that date. It is therefore possible that the WT Act Licences might become assignable at some point after they are issued. However, the exact timing cannot be predicted at this stage; nor can the nature of any restrictions or other conditions that might be imposed on their tradability.
2.2.8 Payment for WT Act Licences
Details of the payment methodology for WT Act Licences are set out in Section 4.5.
2.2.9 The Channel Islands and Isle of Man
The WT Act Licences will not authorise use of the spectrum in any of the Channel Islands or the Isle of Man. The Islands' licensing authorities are separately considering the licensing of these services.
2.2.10 Licensed technologies
All radio equipment to be used will have to comply with the requirements of Directive 99/5/EC the "Radio Equipment and Telecommunications Terminal Equipment Directive" ("Directive"), implemented in the UK by the Radio Equipment and Telecommunications Terminal Equipment Regulations 2000 (SI 2000/730) and with any appropriate Radio Interface Requirements for BFWA. This Directive replaces the national approval regimes for placing equipment on the market and contains also elements encompassing the Low Voltage and Electromagnetic Compatibility Directives. Manufacturers will only need to declare conformity to this one Directive in order to market their equipment. Any type of BFWA technology may therefore be considered for use. However, depending on its ability to co-exist with other systems adjacent either in Spectrum or in location, BFWA systems may be subject to co-ordination procedures which will be published by the Agency.
2.2.11 Spectrum clearance
The Agency has instituted a programme of Spectrum clearance to ensure that the auctioned Spectrum is, as far as is possible, clear from interference from other users. In particular there is currently some UK use of the band by BT and some of their links are operating in parts of the frequency range on offer. These links will need to be migrated and the Agency is currently holding discussions with BT. However, there are, and will be, residual other uses and users within BFWA Spectrum (see section 3.4). Details of any consequent restrictions on BFWA licensees will be contained in Schedule 1 of each WT Act Licence.
2.3.1 Summary of terms
All telecommunications network operators must be licensed under the T Act.The T Act Licence appropriate to a BFWA network will vary according to the services being provided, and whether the licensee is to operate on a regional or national basis. If two-way voice telephony and data services are to be provided, the Secretary of State intends to grant to a successful bidder a PTO T Act Licence, subject to a 28-day statutory public consultation. Where data services alone are to be provided he intends to grant a non-PTO licence which would be subject to a 28 day statutory public consultation if the licence is to confer Code powers - see Section 2.3.3. Bidders may apply for regional or national licences. The Government will seek to inform, during pre-qualification, any Bidder who has reason to believe may be refused a T Act Licence. The Government cannot, however, guarantee that a successful Bidder will be granted a T Act Licence.
The T Act Licence sets out the conditions under which the operator may run a telecommunication system and provide services over it. These obligations and conditions reflect requirements in the T Act itself and also a series of European Directives applying to the telecommunications sector. The template for a national PTO Licence under the T Act is at Appendix K.
There follows a non-exhaustive list of the principal obligations and conditions in the T Act Licence applying to operators of both fixed and mobile systems:
There are, in addition, certain conditions which will have an impact only on operators who meet certain requirements or fall into certain categories, thereby "triggering" the provisions of one or more of these conditions. For example, where an operator is designated as having "Significant Market Power" pursuant to Regulation 4(1) of the Interconnection Regulations, which arise out of the EU Interconnection Directive, the following conditions may apply:
There are also certain conditions which are triggered where an operator is deemed to have "Market Influence" in the relevant economic market specified by OFTEL. These conditions include:
2.3.2 Modification of T Act Licences
Subject to procedures set out in Sections 12-15 of the T Act, as amended by Section 11 of the Electronic Communications Act 2000, the Director General may modify the conditions contained in a T Act Licence. Before making any modifications, the Director General must give notice of his intention to make the modifications and the effect of them; state the reasons why he proposes the modifications; and specify a time of at least 28 days within which representations or objections may be made.
Where a licensee does not consent to a modification, the Director General may refer the proposed modification to the Competition Commission. The Competition Commission is required, on such occasions, to consider whether the matters which relate to the reference operate, or may be expected to operate, against the public interest and, if so, whether the adverse effects to the public interest could be remedied or prevented by the modification of the relevant licence. In making its report, the Competition Commission must include definite conclusions on the questions comprised in the reference together with their reasoning; where they conclude that the matters in the reference operate, or may be expected to operate, against the public interest, specify the effects adverse to the public interest; and where any adverse effects could be remedied or prevented by modifications to the relevant licence, specify the relevant modifications. The Director General must publish the report subject to exclusions which the Secretary of State can direct to be made in order to protect the public interest or the commercial interests of any person.
Should the Competition Commission conclude that the modifications to a licence could remedy or prevent effects adverse to the public interest, the Director General must make modifications to the licence, having regard to the modifications specified by the Competition Commission, which would, in his view, meet the concerns identified by the Competition Commission. He is required to publish the proposed modifications and to allow at least 28 days for representations or objections with respect to his proposals.
The Secretary of State may direct the Director General not to make any modification where he feels that to do so would be against the interests of national security or relations with a foreign government or where the modifications should be made, if at all, after a report by the Competition Commission. He may also direct the Competition Commission not to proceed with a reference by the Director General.
The Electronic Communications Act 2000 has introduced changes to the procedure under which the Director General can modify licence conditions. Because of the requirement of the Licensing Directive that licence conditions should be non-discriminatory, the Director General must as far as possible introduce licence modifications to all licences of a particular type at the same time. Without the provisions of the Electronic Communications Act, a single operator might be able to prevent a modification being implemented in all licences of a particular type by failing to respond to a written request for consent to the modification. Combined with the increasingly large number of licences, this made it increasingly difficult for the Director General to modify licences appropriately.
Under changes introduced by the Electronic Communications Act 2000, if licensees wish to object to a proposed modification then they must expressly state that they object. If a licensee fails to respond to a notice of proposed licence modification, then that licensee will be deemed to consent to the modification. The Director General will also be able to modify individual licences without the consent of all those whose licences are to be modified if the modification is deregulatory.
2.3.3 Telecommunications Code Powers
The Telecommunications Code (the "Code") confers certain powers that may be applied to PTOs or to non-PTOs who are able to demonstrate that they satisfy the criteria set out in Section 10(2)(b) of the T Act, that is, that the running of the system benefits the public and it is not practicable to run the system without such powers, ("Code Powers").
The Code sets out a number of rights and obligations concerning access to public and private land, including the public highway. Under these provisions, as applied in the T Act Licence, an operator is, amongst other things, required to give 28 days' written notice to the planning authority before installing any new telecommunications apparatus above the ground (except in case of protected areas such as National Parks, Sites of Special Scientific Interest, National Nature Reserves, National Scenic Areas, Grade I Listed Buildings, Category A Listed Buildings, etc., where 40 days' notice is required).
In England and Wales no notification to planning authorities under the Code is required where the operator submits an application for planning permission or for prior approval under Part 24 of schedule 2 to the Town and Country Planning (General Permitted Development) Order 1995 (SI 1995/418). In Scotland, the permitted development provisions are set out in Part 20 of the Town and Country Planning (General Permitted Development) (Scotland) Order 1992 (SI 1992/223). No notification under the Code is required where the operator submits an application for planning permission - there are no prior approval arrangements. In the case of Northern Ireland, Part 17 of the Planning (General Development) Order (Northern Ireland) 1993 (SR 1993/278) as amended by the Planning (General Development) (Amendment) Order (Northern Ireland) 1998 applies. There is also a requirement in the T Act Licence that the visual amenity of properties (in particular in the Statutory List of Buildings which have been notified by the planning authority to the operator as deserving special consideration) in proximity to masts/towers must be protected as far as practicable. In addition, all reasonable steps must be taken to investigate using, or replacing, an existing mast or other structure, whether the licensee's own structure or any other operator's, before erecting a new mast.
Licensees and their agents are expected to adopt and implement the DETR's and the National Assembly for Wales's guidance for the installation of radio masts using permitted development rights. In Scotland the permitted development provisions are set out in Part 20 of the Town and Country Planning (General Permitted Development) (Scotland) Order 1992 (SI 1992/223). No notification under the Code is required where the operator submits an application for planning permission - there are no prior approval arrangements. The Government regards discussion with local planning authorities before submitting the relevant notifications/applications as highly desirable and looks to operators to initiate such discussions. Finally, prospective Bidders are reminded that operators have an obligation under paragraph 22 of the Code to remove redundant apparatus.
2.3.4 Enforcement of Licences
The Director General is responsible for enforcement of licences. Where he is satisfied that a licensee is contravening or has contravened and is likely again to contravene any condition of its T Act Licence, he may issue a final order to comply with the condition. Failure to meet the terms of the order may result in revocation of the T Act Licence. The Director General also has the power to issue a provisional order instead of making a final order which, if not confirmed by the Director General, will cease to have effect at the end of the period in the order, not to exceed two months.
2.3.5 Revocation of T Act Licence by the Secretary of State
The Secretary of State may revoke a T Act Licence subject to 30 days' notice being given to the licensee in writing in the circumstances set out in Schedule 2 of the T Act Licence provided that he follows the procedures set down in that Schedule 2.
2.3.6 Duration of T Act Licence
Subject to paragraph 2.3.5 above each T Act Licence has an initial duration of 25 years subject to revocation after 25 years provided ten years' notice in writing is given. Notice cannot be given, therefore, until 15 years have elapsed since the grant of that T Act Licence except where the licensee is in breach of the terms of that licence or consents to its revocation.
2.3.7 Consultation process
The Secretary of State must give notice, under Section 8(5) of the T Act and under Section 10(6) of the T Act where the Code is to apply, of his intention to issue a PTO licence and, where appropriate, to apply the Code. The notice must provide for a period of consultation of at least 28 days, after which the Secretary of State would normally propose to grant the T Act Licence, subject to consideration of any representations made during the consultation. After granting the T Act Licence, the Secretary of State may, under Section 9 of the T Act, designate as "public telecommunication systems" each of the telecommunication systems authorised to be run under that T Act Licence. An order made under Section 9 comes into force on the 29th day after the date on which the order and copies of the T Act Licence to which it relates are laid before both Houses of Parliament or, if laid on different dates, the last of those dates. However, the validity of the T Act Licence is not dependent on a designation order being made.
2.3.8 Ability to assign T Act Licences
T Act Licences are not assignable. The rights and obligations conferred by a T Act Licence are not affected by changes in the ownership of the licensee, except to the extent set out in Schedule 2 of the T Act Licence. Under Schedule 2, the Secretary of State may revoke a T Act Licence where a change in the ownership of the licensee would be against the interests of national security or relations with a foreign government. He may also revoke the T Act Licence if the licensee does not comply with the relevant condition in Schedule 1 of the T Act Licence on notification of changes in shareholdings.
2.3.9 T Act Licence application process
A prospective Bidder in the Auction, who does not already possess a PTO T Act Licence, may wish to submit an application for a T Act Licence before the result of the Auction is known. This is permissible although the necessary statutory consultation on the T Act Licence can only be undertaken once the outcome of the Auction is known.
The DTI, as the T Act Licence issuing authority, will expect any application for a T Act Licence to include information on the following:
Notes for the guidance of applicants for a T Act Licence to run a telecommunication system are available from the DTI, by telephoning 020 7215 1777. Applications for a PTO T Act Licence should be sent to Jeanne Grey, CII1, Room 275, DTI, 151 Buckingham Palace Road, London SW1W 9SS.
2.3.10 Interconnection rights and obligations
In June 1999 new rules came into effect governing the types of telecommunications operator who are entitled to be included on the list of operators with rights to interconnect, known as the "Annex 2 list". Bidders who are not already on the Annex 2 list will have to apply separately to OFTEL for inclusion on that list. A statement on the OFTEL website sets out who can claim rights and obligations to interconnect, and details the information which an operator has to produce to justify inclusion on the list. The statement, "Rights and Obligations to Interconnect under the EU Interconnection Directive", is available from OFTEL's Research and Intelligence Unit (Tel: 020 7634 8761) or the OFTEL website at: www.OFTEL.gov.uk/licensing/an20499.html.
2.3.11 Payment for T Act Licences
Should a successful Bidder in the Auction not already possess the relevant individual T Act Licence, he will be required to pay a fee for the initial grant of such a licence. The current fee for a national PTO licence is £40,000, and for a regional licence £12,500 but these fees are under review.
OFTEL set out its views on the payment for T Act Licences in a statement in August 1999. A short summary is provided below. The full document is available on the OFTEL website.
Under the new regime, annual licence renewal fees will be calculated as follows:
2.3.12 Market influence condition in T Act Licences
Orange Personal Communications Services Ltd ('Orange') is challenging in the courts the Telecommunications (Licence Modification)(Standard Schedules) Regulations 1999 and the Telecommunications (Licence Modification)(Mobile Public Telecommunications Operators) Regulations 1999. These Regulations were made under section 2(2) of the European Communities Act 1972 and together amended Orange's Telecommunications Act licence. Orange is challenging the use of Regulations under section 2(2) to modify its licence, in particular by including in the licence a condition enabling the Director General to determine the licensee to be an operator having market influence in any particular telecommunications market specified by him, and related conditions. Orange also claims that the procedure for appealing against the modifications made by the Regulations is inadequate for the purposes of the Licensing Directive. The case is to be heard on 26 and 27 July 2000.
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