Original URL: http://www.theregister.co.uk/2008/11/04/complementary_ground_components/

Ofcom tries to launch satellite plans again

EU holds the upper hand (literally)

By Bill Ray

Posted in Networks, 4th November 2008 10:31 GMT

UK regulator Ofcom is consulting, again, on proposals to allow satellite broadcasters to use terrestrial transmitters, but won't be drawn on the most important issue of all - price.

The EU is planning to license a satellite operator to use 60MHz of spectrum around 2GHz for two-way data services, but said operator will want to use ground-based base stations, to improve coverage at the same frequency as the satellite. This is something that has to be licensed by regional operators such as Ofcom, which has proposed charging a quarter of a million quid per MHz for the privilege of filling holes.

The spectrum in question is 1980-2010MHz for the downlink, and 2170-2200MHz for the return channel, this is fairly short range* but compares well with 3G telephony which hangs around 2.1GHz in Europe. That means a satellite signal won't penetrate much into buildings, or in urban canyons, so operators like to deploy a Complementary Ground Component (CGC) - a network of base stations operating at the same frequency as the satellite but technically fixed to avoid interfering with it.

Normally Ofcom would want to auction off the spectrum, and where that's not possible the regulator uses Administrated Incentive Pricing (AIP) to work out what the value would be if a different service were deployed in that spectrum. The problem here is that only the company operating the satellite will be able to run the ground-based network - anyone else would be unable to avoid interfering, so there's no change of a UK auction. Ofcom wants to use AIP, and has estimated the value of the spectrum at £554,000 per pair of 1MHz blocks based on what it would be worth if GSM were deployed there.

But GSM can't be deployed there, as the spectrum is only of value to the holder of the satellite licence: there is no other service that could be deployed. Some respondents, such as the BBC, argue that this means the spectrum is worthless and therefore any charge should only cover administration fees. Others, including UK operator 3, argue that the spectrum is sufficiently close to 3G to be estimated on the sale-value of that spectrum - putting the price up to a potential £1.68m for each pair of MHz.

This is not uniquely a UK issue, as the Satellite Industry Association puts it:

"If the proposed Ofcom AIP spectrum fee were adopted by half of the European nations covered by the pan-European 2GHz MSS authorization it would cost MSS operators approximately £183,000,000 annually in fees alone to provide CGC. Fees this high would likely render any business plan infeasible for 2GHz MSS/CGC."

Of course, there's nothing to stop an operator launching a satellite, offering a service such as mobile TV, and just not paying Ofcom anything - but that would mean terrible in-building-and-urban coverage for UK punters with the spectrum lying unused while the only potential customer makes their money elsewhere.

Ofcom is apparently talking to companies interested in offering satellite services, and will issue a statement on pricing later this year. Until then you can read about their decisions on whether the licence should be legally linked to the EU-wide satellite operator's licence (yes), and if any licensee will be required to provide minimum coverage (no), in their consultation - but for the big question you'll have to wait while Ofcom consults for a third time. ®