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Balloon-A-Gram - Response to the Consultation Document: 3.4 and 10 GHz: Scenarios For Spectrum Packaging and Delivery |
Balloon-A-Gram wishes to provide a service to all the UK public enabling them to use Internet technology without charge. Equipment is to be provided in public spaces (post offices, pubs, indoor and outdoor events) where a time limited broadband walled garden from the internet will be available.
As a newcomer to the radio communication industry; I hope you will put up with my lack of background knowledge.
2.1) 5 Key Objectives
Several people in the industry have implied to me that one of the objectives of all licence applications is to maximize the revenue to the Treasury in the form of licence fees. This is entirely understandable objective but it is not directly included as one of your 5 key objectives. It is partly covered in the objective aiming to maximize economic value, however Professor Jowett's presentation implies that only a small percentage of the licence fee is actually included in the economic value. He quotes figures of 0% and 30%.
Please can you confirm that the receipt to the Treasury will not be used to compare applications for this licence?
2.2) Spectrum packaging
The two frequencies need to be considered separately.
2.2.1) 3.4 GHz
The properties of the 3.4 GHz really suggest a single national licence. In particular:
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This frequency requires co-ordination between the operator and the Ministry of Defence. |
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This frequency has restricted capacity. A large proportion might be used up in guard bands if more than one operator is using it, unless you can assume very detailed co-operation between operators. |
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This frequency is able to be configured to cover relatively long ranges. This property makes this frequency relatively suitable for use in providing service in rural areas provided there are no interference problems such as might occur with more than one licence. |
2.2.2) 10 GHz
The properties of the 10 GHz frequency enable any of the 3 scenarios to be used appropriately. If a National Licence 1 is chosen Balloon-A-Gram would consider partnering with local or regional operators to provide the full complementary service to the public using the 10 GHz. Bundling the 2 frequencies together in a single national licence would also enable areas of shadow on the 3.4 GHz frequency to be filled using the 10 GHz both in rural and urban areas.
The 'Critical Mass' Licence is the least attractive option from Balloon-A-Gram's point of view for the 10 GHz spectrum. This would require Balloon-A-Gram to negotiate with a number of different licence holders in order to provide national coverage of the rural areas.
'Hot Spot' Licences would be acceptable to Balloon-A-Gram provided that all metropolitan areas had an operator handling the 10 GHz spectrum. This would allow Balloon-A-Gram to negotiate with these licence holders or cable operators or other telecom operators for service in these areas. It would also allow Balloon-A-Gram to use this frequency in rural areas for infill in areas of shadow.
2.3) Backhaul
Balloon-A-Gram believes it is essential that these frequencies can be used for backhaul if necessary.
2.4) Means of payment
2.4.1) Prepayment of Fees
Since communications is not a cash-rich industry, pre-payment of fees increases the dependency of the industry on the financial institutions and on the business cycle. In reality this tends to distract the communications company from focusing on its main aim of building a profitable communications network that consumers can use.
2.4.2) Royalties
Royalties can have the effect of reducing the development of this frequency. If two alternative frequencies are available, the one where fees have been paid will be used in preference to the one with royalties.
2.4.3) Annual Fees
Balloon-A-Gram believes that annual fees are the best way of paying for this licence. If there is a problem of insuring efficient use of the spectrum this should be covered by additional licencing conditions such as 'use it or lose it'.
2.5) Means of assignment
The Radio Authority has specified that the objective is to award the spectrum to those who will maximize the economic value. This implies that the means of assignment that be used will also award the licence to those who will maximize the economic value. The calculation of economic value depends on assumptions made about the elasticity of demand and supply and the marginal costs of the existing incumbent. If an auction is to be considered the Radio Authority must be prepared to provide standardized figures for these variables. If this data is not standardized then the licence will be awarded to that company who has prepared the most attractive set of these figures rather than who has provided the largest licence fee at auction.
Balloon-A-Gram believes that comparative selection is the most appropriate means of assignment for this frequency.
David Winder
26th January 2001
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