29 October 2008
1.1 This document sets out our decisions on the award on a geographic basis of part of the spectrum that is being freed up for new uses by the switchover to digital transmission of television. It focuses on the first phase of awards, for spectrum lots covering Cardiff and Manchester.
1.2 By switching from analogue to digital transmissions (i.e. digital switchover – ‘DSO’) more television channels can be broadcast using less spectrum. The spectrum that is no longer needed for television can be released to the market for other services. All TV transmissions in the UK will have switched to digital in 2012. We call the released spectrum the digital dividend.
1.3 There are two distinct categories of spectrum in the digital dividend: the spectrum that by 2012 will be totally cleared of television transmissions (‘cleared spectrum’); and, capacity available within the spectrum that will be used after DSO to carry the six existing digital terrestrial television (‘DTT’) multiplexes. We are concerned in this document with the second type, which we call the geographic interleaved spectrum. It is so called because for each channel within this spectrum there are geographic areas where it will not be used for DTT. In those areas the unused channels may be used for other services.
1.4 The digital dividend comprises a significant amount of spectrum. It is spectrum that can be used for many different applications, including more digital television, mobile telephony, broadband delivery and programme production. It is our duty to secure the optimal use of the spectrum, taking into account a range of criteria set out in the Communications Act 2003. Our principal duties are to further the interests of citizens in relation to communications matters, and to further the interests of consumers in relevant markets, where appropriate by promoting competition. We have conducted an extensive review of how to make available the digital dividend in a way that will maximise the total value to society generated by its use over time. We consulted on this digital dividend review (‘DDR’) in December 2006, and published a statement in December 2007 (the ‘December 2007 DDR statement’[ (-1-)]).
1.5 In the December 2007 DDR statement, we set out our conclusions on how we proposed to make available the digital dividend. Our main decisions were:
- to package the digital dividend in a way that enables the widest possible range of uses, including additional DTT multiplexes as well as new mobile services, and not to reserve any of the digital dividend for specific services, with one important exception (see below);
- to award geographic packages of interleaved spectrum suitable for local television, but not to restrict their use to this service;
- to reserve most of the available interleaved spectrum to meet the needs of programme making and special events (‘PMSE’) users, and for channel 69 to continue to be available on a licensed basis for PMSE;
- to propose allowing licence exempt use of interleaved spectrum for cognitive devices;
- to auction the cleared spectrum, including channels 36 and 38 and the interleaved capacity available in channels 60 and 61;
- to auction the packages of interleaved spectrum suitable, but not reserved, for local television;
- to award by beauty contest the package of interleaved spectrum and channel 69 to a band manager with obligations to programme making and special events (PMSE) users; and
- to award the digital dividend as soon as possible.
1.6 In summer 2008, we published three separate consultations on the spectrum awards for the digital dividend:
- the consultation on the award of the cleared spectrum was published on 6 June and closed on 15 August 2008[ (-2-)];
- the consultation on the award of geographic interleaved spectrum awards was published on 12 June and closed on 21 August[ (-3-)] (we call this the ‘June consultation’ in this document); and
- the consultation on the award of spectrum to a band manager with obligations toward PMSE was published on 31 July and closed on 16 October 2008[ (-4-)].
1.7 In the June consultation we proposed a phased approach to the award of the geographic interleaved spectrum:
- In the first phase we would award spectrum lots for areas where DSO is before spring 2010 and where there are existing local TV stations, operating under restricted television service licences (RTSLs), i.e. Carlisle, Cardiff and Manchester. These awards would take place in late 2008 or early 2009.
- This would be followed by the combined award of spectrum lots at about 25 transmission sites that cover population areas likely to be large enough to support a broadcasting station, or where there are existing RTSLs and that may be suitable for aggregation. The indicative list in the June consultation included lots that could cover areas including Manchester or Cardiff.
- The final phase would involve individual awards of spectrum lots in other areas for which we receive convincing expressions of interest and/or there was an existing RTSL.
1.8 This statement covers only those issues raised in the June consultation that relate directly to the first phase awards. We are currently considering how to proceed with the remaining awards, in the light of responses to all three digital dividend consultations, and plan to make a further announcement later this year.
1.9 We received 40 responses to the June consultation, 12 of which were confidential responses. We have placed the non-confidential responses on our website[ (-5-)].
1.10 This statement sets out our decisions for the first phase of awards, taking account of matters raised in the June consultation and responses to the proposals we made in it. Our main decisions are:
- To award licences for frequency channels to cover Manchester (from the Winter Hill transmission site) and Cardiff (from the Wenvoe transmission site) early in 2009, but at this stage not to award a licence for a frequency channel to cover Carlisle (from the Caldbeck transmission site) (see paragraph 5.4).
- To hold the two awards as soon as practicable, probably in the first quarter of 2009, using single unit ascending bid auctions and to hold those auctions concurrently.
- The reserve price will be £10,000 for each licence and bidders will be required to submit a deposit for the same amount to take part in the auction.
- At the end of each bidding round of the auction we will inform bidders how many valid bids were made in the round.
- The level of protection of existing DTT multiplexes will be specific to the two licences being awarded.
- Licences will include a block edge mask and technical parameters suitable for DTT. Licensees wishing to provide services other than DTT may ask for the technical licence conditions to be varied.
- Licences will include restrictions on those who may provide a DTT multiplex service, and minimum requirements for interoperability with existing DTT multiplexes.
- Licences will be of indefinite duration with an initial term lasting until 2026.
- Licences will be tradable.
1.11 We are publishing, at the same time as this statement, the following documents that relate to the first phase awards:
- an information memorandum, which sets out relevant information that interested parties should take into account, on the basis set out in that memorandum, when considering their possible participation in the awards; and
- a notice of our proposal to make statutory instruments in relation to the awards in accordance with section 122 of the Wireless Telegraphy Act 2006 (the ‘WT Act’). For each of the first phase awards there will be the following statutory instruments: (i) the auction regulations, (ii) regulations extending spectrum trading to the relevant frequency bands, (iii) regulations to provide for publication of the identity of the licence holder and some specified licence details and (iv) an order relating to the limitation of the number of licences to be awarded in the bands.
1.12 Interested parties are advised to familiarise themselves with the auction regulations, in particular the rules relating to disclosure of confidential information, and those that prevent association and collusion between bidders.
1.- Digital Dividend Review. A statement on our approach to awarding the digital dividend, Ofcom, 13 December 2007, http://www.ofcom.org.uk/consult/condocs/ddr/statement/
The full document is available below