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

Our comments focus principally on 10GHz. ntl does not currently have an interest in the 3.4GHz band.

Spectrum packaging

Ntl does not believe that it is necessary to postpone the allocation of spectrum (scenario 4); nor do we believe that there is case for using the spectrum for allocations other than WLL (Scenario 5); whilst there are clearly short term problems in relation to the financing of WLL activities, in the longer term this remains a viable technology and indeed the only possible technology for providing a competitive broadband network to that of BT outside of cable build areas.

We note the comment made about holding the spectrum back for other applications such as mobile. Here the Radiocommunications Agency needs to consider separately the 10 GHz spectrum from the 3.4 GHz spectrum. We have had privileged sight of work by a small US company who are producing UMTS TDD technology working in the 3.4 GHz band. They are claiming non-line of sight use out to a distance of 1 km. At 10 GHz only line of sight operation would be possible.

Of the other three scenarios, it seems to us that the best outcome would be a combination of 'hot spot' licensing with a 'first come, first served' mechanism, but with some incentive provided to bidding operators to aggregate the two. The most obvious solution is to provide some kind of pairing arrangement or an incentive through the licence fee payment mechanism to take up spectrum in less attractive areas.

There are a number of practical issues which would need to be addressed. (Eg state aids concerns, as you allude to in your paper.) But these do not seem insurmountable. The main challenge would be to be able to agree an objective basis for ranking particular regions for 'commercial attractiveness' to avoid pairing of areas which were in practice equally attractive. However, the work already commenced by the RA, and the possible extension of this to provide reliable information on subscriber concentrations, would go a long way to achieve this. (A further refinement would be to build a second tier of modelling which looked at demographic factors such as income or GDP distribution and weight results for this as well as density.)

Award process

ntl is relatively indifferent between the payment mechanisms proposed here; in our view, it is more important to ensure that the absolute level of pricing is realistic and that the effect of a pricing methodology is not perverse. We have indicated before that we consider the current licence escalator both unrealistic and simply too steeply curved given the real problems with rolling out spectrum-based services (not least, the still unaddressed interference problem we are encountering).

Licence conditions

We do not think that roll-out obligations work. 'Use it or lose it' seems to us to be a better way to proceed, provided a means can be found to draft such a condition in a way which gives the RA appropriate discretion to forebear from applying the condition where exogenous factors have prevented a licensee from rolling out services through no fault of its own.

We have already noted that rebating roll-out into 'below the line' areas seems to us to be worth pursuing.

Means of assignment

As already noted, we support the idea of 'first come, first served' allocations for less viable areas with some kind of 'hot spot' allocation mechanism for city centres.

As regards the latter, on balance we would favour comparative selection at this time though the case for a hybrid selection/auction, or even a straight auction, may be stronger if market sentiment improves, leading to a greater range of potential bidders and a more diverse range of business proposals than can easily be accommodated in a comparative selection process.

ntl Regulatory Affairs, January 2001