Government sets out 4G spectrum auction plans

Frequencies for new wireless technologies will be auctioned at the end of 2011, while company spectrum ownership limits will be handled by Ofcom
Written by David Meyer, Contributor

The coalition government has set the stage for a 4G spectrum auction at the end of 2011, and has dropped the previous government's requirement for a cap on the amount on spectrum any one company can buy.

In a statutory instrument (SI) laid before parliament on Tuesday, just before parliament's summer recess began, the government said a combined auction of 800MHz and 2.6GHz spectrum would have to take place at the end of 2011. The SI effectively gives Ofcom responsibility for establishing caps on 4G spectrum holdings.

The SI, which was trailed earlier this month, will have to be approved by both houses of parliament in October after the recess.

"We want the UK market to remain at the fore of delivering devices like the iPad and smartphones, but they need the networks to continue to improve and increase services," communications minister Ed Vaizey said in a statement on Wednesday. "Under our plans, our mobile industry will have access to the 21st-century infrastructure it needs to give UK consumers the latest technologies and even better coverage for broadband on their mobile phones."

The coalition's SI is very close to that laid down by the Labour government in March, with notable differences being the lack of a government-mandated cap on spectrum holdings — an issue that is now up to Ofcom to solve — and changes to the coverage conditions imposed on purchasers.

There will now be no coverage condition for 800MHz , but the coverage requirement for 3G licence-holders will increase in 2013 from 80 percent of the population to 90 percent. Those 3G licences will also be made indefinite and tradable, although an annual licence fee will be introduced from 2022 onwards.

The 800MHz and 2.6GHz spectrum will be usable for two '4G' technologies: WiMax and the long-term evolution (LTE) of 3G. The latter is proving more popular in European markets, so it is most likely to be used in the UK. 4G services will be higher speed and lower latency than the 3G services that are currently available.

"The objective of the SI is to enable the rapid release of spectrum to the market and ensure investment in modernising the country's digital infrastructure as soon as possible," a spokesperson for the Department of Business, Innovation and Skills (BIS) said in a statement to ZDNet UK on Wednesday.

"We have decided that a simplified version of the direction is sufficient at this time to enable us to proceed to an early release of the spectrum. However, we have asked Ofcom to conduct a competitive assessment of the future development of the 3G and 4G markets in the UK, including the potential for new entrants, to inform the design of the auction."

An Ofcom spokesperson told ZDNet UK that the telecoms regulator may impose its own caps on the 4G spectrum that can be held by one company — the previous government had proposed that one company should be limited to 180MHz of spectrum in the combined auction.

"We need to make an assessment of the likely future competition in mobile markets once the spectrum is available," Ofcom's spokesperson said.

As with Labour's SI, the new SI allows for spectrum refarming, so those with 2G spectrum can reuse that spectrum for 3G services — this issue has held up the 4G auction for years, as operators have said they don't know how much to bid for new spectrum until they know how much they can squeeze out of the old.

"It is critical for UK consumers that in setting out the auction process Ofcom addresses the distortions now created by allowing the incumbent operators to retain full access to 2G spectrum," 3 chief executive Kevin Russell said in a statement on Wednesday. "Competition puts mobile broadband into the hands of millions; without it service, quality and price will be jeopardised."

The spectrum in the 800MHz band is still in the process of being cleared of analogue users, and the coalition's new SI addresses the concerns of Programme Making and Special Events (PMSE) users, who have to switch away from the analogue wireless microphone systems they currently use. The SI details funding to help these users upgrade their equipment in the switch from Channel 69 (854-862 MHz) for Channel 38 (606-614 MHz).

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