Application of spectrum liberalisation and trading to the mobile sector

  • Start: 13 February 2009
  • Status: Closed
  • End: 01 May 2009

This consultation is about the future of the spectrum currently used to provide 2G and 3G mobile services in the UK – the 900 MHz, 1800 MHz and 2.1GHz spectrum bands.

In particular we are consulting on how we should implement a proposed European Directive and a draft Radio Spectrum Decision that would require the 900 MHz and 1800 MHz bands to be made available for UMTS (3G) as well as GSM (2G) technologies.

UK consumers and citizens already enjoy enormous benefits from the services provided using spectrum in these bands. Our goal is to ensure that UK consumers and citizens continue to enjoy the greatest possible benefit from the use of these and other frequency bands, as demand, technology and the services offered, continue to develop and evolve.

We can already foresee, for example, potentially significant consumer and citizen benefits arising from the deployment of 3G technology in the spectrum bands currently used to provide 2G services – the 900 MHz and 1800 MHz bands. The deployment of 3G technology in the 900 MHz band in particular could bring significant benefits to consumers and citizens in the form of deeper and wider availability of mobile broadband services – access to these services at good data rates, available deeper in buildings and in more rural areas than would otherwise be the case.

Our policy is, in general, not to direct such changes however; rather it is to ensure that there are no regulatory barriers that could hinder such beneficial developments. At the same time our role is not entirely passive either – where we foresee a risk that the market will fail to deliver the full benefits of spectrum use to UK consumers and citizens, for example because spectrum is concentrated in the hands of fewer operators than it might otherwise be, we may take steps to reduce or eliminate that risk (provided that such steps are justified and proportionate).

On 29 January 2009 the Government published its Digital Britain Interim Report. In that report the Government specified a Wireless Radio Spectrum Modernisation Programme, which highlighted the importance of resolving quickly the future of the 2G spectrum, to allow re-use of the spectrum whilst maintaining a competitive market. The Government went on to explain that it believed that an industry-agreed set of spectrum trades could represent a better and quicker solution than one imposed through regulation. It gave the industry until the end of April 2009 to agree a way forward, or the Government will support an imposed solution.

Ofcom too would welcome a proposal from the industry for a set of spectrum trades that would address potential distortions of competition arising from liberalisation of the 2G spectrum, and promote efficient use of this spectrum, for the benefit of consumers. This consultation document is intended to provide greater clarity as to Ofcom’s concerns in these regards, and hence what we will be looking for a voluntary solution to achieve. It also sets out Ofcom’s proposals as to what an imposed regulatory solution would look like, were the industry to fail to agree an acceptable way forward by the end of April 2009. As such we hope that it will provide a helpful context for discussions within the industry.

What follows therefore sets out Ofcom’s proposals in the event that there is not an acceptable agreed industry solution by the end of April, under the Government’s Wireless Radio Spectrum Modernisation Programme.

In the case of the 900 MHz, 1800 MHz, and 2.1GHz spectrum bands, we propose that a regulatory solution would comprise the following key steps to address potential distortions of competition and facilitate the efficient use of these spectrum bands for the provision of mobile services, for the benefit of UK consumers:

  1. To remove the technology restrictions that currently apply to these bands: in the first instance to allow 3G (UMTS) technology to be used in the 900 MHz and 1800 MHz bands; in the longer term to allow any technology that will not cause harmful interference to neighbouring users to be deployed in both these bands and the 2.1GHz band.
  2. To allow spectrum in these bands to be traded, so that those who can make best use of this spectrum have the opportunity to gain access to it through commercial negotiation, rather than regulatory intervention. We none the less propose monitoring transfers of spectrum in the 900 MHz band to ensure that there is no adverse effect on competition arising from any trading of this spectrum.
  3. To require the current holders of the 900 MHz spectrum (Vodafone and O2) each to give up a proportion of the 900 MHz spectrum they currently hold (2 x 2.5MHz each, out of a current total of 2 x 17.4MHz each) to allow a third operator to have access to this particularly important spectrum. We propose giving Vodafone and O2 two years in which to clear and release this spectrum – a period that we judge long enough for them to be able to clear this spectrum without causing significant disruption to existing customers. We propose holding an auction for the released spectrum (to be awarded as a single lot of 2 x 5MHz) as soon as practicable – likely to be about a year in advance of the spectrum becoming available – with Vodafone and O2 prohibited from acquiring the released spectrum through this auction.
  4. To review the level of Administered Incentive Pricing (AIP) applying to the 900 MHz and 1800 MHz spectrum so that in future it reflects the full economic value of this spectrum post liberalisation, so as to encourage its efficient use.

We previously consulted on these matters in September 2007, and on the basis of responses to that consultation, and subsequent analysis set out in this document, we are currently minded to make the following decisions:

  • To reject the option of requiring the existing licensees to give up all of the 900 MHz and 1800 MHz spectrum for re-award by Ofcom.
  • To liberalise spectrum in the 2.1GHz band – removing the current restriction to UMTS technology.
  • To make spectrum in the 2.1GHz band tradable.

Anyone with an interest in these matters is invited to comment on our proposals, conclusions and supporting analysis. We would also welcome any evidence that interested parties are able to provide in support of their comments. Comments and supporting evidence should be submitted to us by no later than Friday 1 May 2009.

Main documents

Supporting documents

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Responder name Type
bt.pdf (PDF File, 68.2 KB) Organisation
dhs.pdf (PDF File, 15.9 KB) Organisation
intellect.pdf (PDF File, 9.9 KB) Organisation
orange.pdf (PDF File, 158.4 KB) Organisation
peters.pdf (PDF File, 10.0 KB) Organisation
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