Original URL: http://www.theregister.co.uk/2011/02/03/ofcom_trading/
Mobile spectrum gets more mobile
Baby steps towards mega-auction
Ofcom has detailed how existing mobile spectrum will be traded between companies, and how the 3G licences will be extended, both necessary precursors to its proposals for next year's mega-auction.
The two new proposals from Ofcom contain no surprises, being descriptions of how to implement changes already proposed and largely agreed by the industry. But the devil is often in the detail when it comes to legislatory changes, and there's quite a bit of detail in these ones.
Extending, and tweaking, the 3G licences is the most delicate as it requires approval from the existing licence-holders (pdf). Luckily the changes are almost entirely to their benefit – the licences will no longer run out, holders will get five years notice of any revocation, and the licences can be bought and sold.
Licence-holders might be less impressed by having to pay an annual fee from 2021 (when the current licences are set to expire), or the new coverage obligation (90 per cent of the UK population, 90 per cent chance of getting 768Kb/sec outside, by 2013).
Those obligations travel with the licences, something which is specified in the new proposals on mobile spectrum trading (pdf) that allow any mobile company to flog off all, or part, of its frequency holdings. How the coverage requirement will be applied when a company sells half the encumbered spectrum is something Ofcom will decide on a case-by-case basis.
The regulator has decided that existing rules aren't up to the job of ensuring competition, so Ofcom will be modifying the rules to allow it to also consider the competitive landscape when approving spectrum sales.
Mobile spectrum is certainly the most valuable of the UK's airwaves, but only because it was made so. Specific bands were allocated to mobile telephony, and later to specific technologies, making them far more valuable than neighbouring frequencies. Now we are relaxing those allocations, the value is sustained – thanks to the quantity of equipment designed to operate in those bands. But as the kit gets more agile and the allocations less restrictive, it should be assumed that the value of the previously allocated bands will drop over time.
In the UK, that process will likely start with the mega-auction next year, which will see huge amounts of radio spectrum sold off. Given the fact that mobile companies pay more for their spectrum than anyone else, it is assumed that most of the mega-auction will end up on their hands – but we will have to wait until later this month to see how Ofcom plans to structure the thing. ®