Atlantic Telecom Group - Response to the Consultation Document: 3.4 and 10 GHz: Scenarios For Spectrum Packaging and Delivery

Dear Mr Jones

3.4 and 10 GHz: Scenarios for Spectrum Packaging and Delivery

Many thanks for inviting our views on the above report. I hope that you will find the following submission of help.

Geographical scope of the licences

We agree that rolling out services to rural areas using national or regional licences is problematic. We believe that scenario 3 ("hot spots") has the potential to create common ground between all parties. It would be a realistic solution for operators - who may only be able to create a business case based on providing services in a densely populated urban area. It would also allow the Agency to tailor the cost and obligations for licences covering rural areas.

We would emphasise, however, that the viability of this scenario depends upon the definition of "metropolitan areas". It would be important to ensure the inclusion of large towns and cities, such as Aberdeen, which is in a rural area and has not historically been considered as a "metropolitan area" in the terms of, for example, Greater Manchester.

On initial assessment, there would appear to be no overriding need for one licence to be awarded including both the 3.4 and 10 GHz spectrum. Separating these would appear to give more scope for competition. It may be the case that this would only be required in the event that coverage obligations were attached to the licence. In such circumstances, we believe that scenario 3 has the means to address this issue.

Means of payment

Of the given options, we would support the payment of annual fees. While we accept that it is true to say that fees would be recouped from customers, that is inevitably the case of any and all expenses incurred by a business, including prepayment or royalties.

With the increasingly dynamic nature of the industry, an annual fee has the potential to be re-evaluated in the event that circumstances change which have a dramatic effect, either to the benefit or detriment of the licensee.

Licence Conditions

As mentioned above, given the changeable nature of the industry, we would be concerned about the imposition of rollout obligations on a licence. However, obligations such as "use it or lose it" or "build it or lose it" may discourage operators obtaining licences on a speculative basis and allow for faster reallocation in the event of an operator's failure to comply. An example of this approach is the recent German situation where the regulator has threatened to revoke licences where BWA operators have failed to make progress with network build. Such obligations must be combined with realistic time frames for network build.

Means of Assignment

The process of comparative selection has a history of producing solid services to large numbers of customers. The auction process, however, has had a severe impact upon the values of companies throughout the telecommunications sector, as the need to finance spiralling licence costs is one of ongoing concern to the financial community. Possibly as a result of this, last year's auction of 28G spectrum did not produce the desired effect in terms of generating services and competition across all areas of the UK.

Atlantic would therefore support a comparative selection process in the case of 3.4 and 10 GHz spectrum licences.

I hope you find the above of interest, and would be happy to discuss the issue further if this would be of assistance.

Yours sincerely

Gordon B Sleigh Group
Managing Director