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Ofcom slices up the digital dividend

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Ofcom, the UK regulator, has published its first consultation on how to carve up the digital dividend – the spectrum released in 2012 when analogue TV is switched off. And if you've found previous auctions confusing you ain't seen nothing yet.

In total there is 144MHz of spectrum coming onto the market: 112MHz from the analogue switch off, 16MHz of interleaved spectrum which is also newly available, 8MHz from aeronautical radar, and British radio astronomy has agreed to hand over another 8MHz.

In theory this should be easy enough, Ofcom has no plans for deployment obligations - such as those used in the 3G auctions, where bidders were required to deploy services to a percentage of the population within a specified time frame. All licences will be UK-wide, so other than the fact that no-one can bid for more than 50MHz there are no other complexities.

The spectrum is already cut into 8MHz chunks (each analogue TV channel uses 8MHz), so there could simply be 18 8MHz-wide lots. These would vary in value based on individual differences. Channel 36*, for example, is already available and therefore more valuable, while channels 37 and 39 will have to avoid interfering with radio astronomy in nearby countries and so be limited to low-power applications.

But Ofcom wants to be technology neutral, and to treat spectrum much more like land – though for the moment licences will be lease-hold not freehold; licensees will have to pay a ground rent after 2026.

But selling the spectrum in 8MHz-wide blocks would express a preference for technologies that can efficiently use such a width. Mobile telephony, for example, is much happier with 5MHz-wide blocks, putting Ofcom into something of a quandary.

The alternative is to allow bidders to ask for lots they define themselves, in whatever combination of widths they would like, then feed those numbers into a computer which can shuffle them around to see which combination makes the most money for Ofcom (which is apparently just a happy by-product of ensuring effective spectrum utilisation). So bidders will not ask for a specific frequency, only for a specific quantity of bandwidth.

The problem with this approach is that not all parts of the spectrum are made equal. As well as the channels already mentioned, 31, 40 and 63 are beside existing digital terrestrial television services, and it will be the responsibility of the licensee to avoid interfering with those services.

Because of all this Ofcom is proposing a compromise: the channels already mentioned will be sold off as separate 8MHz-wide blocks, along with the interleaved channels (61 & 62). The remaining spectrum will be divided into two blocks by the existing DTT services, and will be auctioned off in lots defined by the bidding parties.

Ofcom is inviting responses to these ideas until August 15, and also notes that Europe may well have something to say on the matter. Viviane Reding, the EU telecoms commissioner, would like to see a frequency allocated to DVB-H (her preferred format of mobile TV) across Europe, and with the rest of Europe still considering how to utilise the digital dividend she may want a slice. But as Ofcom puts it:

At present, the nature and content of further action at EU level is unclear. The European Commission has said that it plans to set out a regulatory road map on the digital dividend in late 2008.

In other words: if we can get the auction done and dusted by the middle of next year then it will be too late for the EU to do anything about it.

They do promise to "keep these developments under review", but assuming bidders can understand the auction process the spectrum will be sold off and in private hands before anyone from Brussels can come and grab a chunk. ®

* When talking about TV spectrum it's traditional to refer to "channels". To get proper frequencies just multiply the channel by 8 then add 303.35 to get MHz. The channel starts from there and is 8MHz wide.

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