UK.gov OKs plan to flog digi dividend by end of year
Meek spectrum proposals triumphant
The government has asked Ofcom to implement Kip Meek's proposals for spectrum reform, with a view to getting shot of the digital dividend by the end of 2010.
The UK has 60MHz of old TV spectrum near the 800MHz point of the dial, along with 190MHz in the 2.6GHz band, both of which the government desperately wants to sell to the highest bidder, but both bands have been mired in legal and logistical battles that are now approaching resolution with a decision to recommend adoption of the plans proposed by the Independent Spectrum Broker, Kip Meek.
The Department for Business, Innovation and Skills (BIS) has been consulting on the proposals for the last few months. It has been canvassing opinions on the areas highlighted in Meek's report as needing resolution, not to mention waiting to see what became of the T-Mobile/Orange merger. But with those issues out of the way the government is hoping to get its plans approved by parliament during the current session.
In general those plans (pdf) follow Meek's recommendations. Some of the details have been tweaked, such as the addition of a universal service requirement for part of the 800MHz band, but more importantly the plans have a time scale attached. That time scale calls for the mega-auction of both the 800MHz and 2.6GHz bands, to take place this year if possible, with 50Mhz of (WiMAX-suitable) TDD spectrum being sold during 2010 at the very least.
These licences won't specify a technology, but a contiguous block of 50MHz at 2.6GHz is well suited to Time Division Duplex (TDD) tech, and WiMAX is the biggest player in TDD at the moment. The government is hoping that selling off the whole thing as a single block will encourage a new entrant offering fixed or mobile WiMAX, while preventing existing operators buying up bits and squeezing out a potential competitor.
Existing licences will be similarly de-restricted, allowing 3G or 4G to be deployed where 2G currently exists. Those existing licences will be extended indefinitely too - and made tradeable - to encourage investment.
Those buying the new spectrum will get it for 20 years without additional fees, and then have to pay some sort of annual rate based on Administered Incentive Pricing (Ofcom thinks of a number, you pay it) or similar.
Not that existing companies will be free to buy as much spectrum as they like. Total spectrum ownership by any operator will be capped at 180MHz (90MHz in each direction), with no operator allowed to own more than 40MHz of spectrum below 1GHz (800 and 900MHz bands, which offer better building penetration and range).
That cap is higher than that recommended by Meek, who thought 120MHz of spectrum would be enough for anyone, but it will please T-Orange, which will be sitting on 140MHz of spectrum even after handing over its sacrificial pair of 15MHz chunks to appease the Office of Fair Trading.
Those caps will only apply for a year after the mega-auction, but will be enforced with lease-back specifically banned - so an operator can't buy up more spectrum under another company name then rent it back to themselves.
A couple of those blocks are going to come with service requirements too - two of the of the 5MHz channels at 800MHz (2x2x5MHz - 20MHz in total) will come with a requirement to hit 99 per cent of the UK population.
Of more interest to a new player is the deal that anyone who manages to cover 70 per cent of country will be entitled to a roaming agreement from the other operators, and so can piggyback on someone else's network to get universal coverage.
But even if you're not planning to hit most of the population you will have to deploy to at least 750 cell sites within the first year just to prevent any spectrum hoarding.
The department is hoping to get parliamentary blessing on the proposals within the current session, with the intention of shifting the whole digital dividend into private hands during 2010, or the 50MHz of TDD spectrum sold off at the very least.
That's a pretty aggressive time scale, and one that would be tough to meet even if this weren't an election year, despite the eminently practical compromises in the proposals. But perhaps an election will distract attention away from spectrum issues and allow the existing operators to quietly carve the airways up between them with the minimum of public scrutiny. ®
Good luck with that!
After all, companies are falling over themselves to make large-scale investments in new telecoms networks at the moment, aren't they... not. This auction will not raise anything like the auction for 3G - just combine the recession with the relative saturation and high price of existing mobile broadband.
I'm not saying it won't sell, but I'll be very surprised if it sells for anything above £250mil, what with the restrictions being eased on existing spectrum.