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The 600 MHz Incentive Auction in US – What we know so far

4 Apr

Source: Gunjan –

A major high stakes wireless industry event generating a lot of interest nowadays in US is the 600 MHz incentive auction for broadcast spectrum scheduled to take place in 2015. This auction assumes special significance since it would be perhaps the last set of airwaves under 1 GHz that will be sold in America through a primary auction. Given the exploding demand for data on mobile devices and the superior propagation characteristics of wireless signals in this band, the four major US carriers – Verizon, AT&T, Sprint, T-Mobile and many smaller regional service providers have exhibited deep interest in this spectrum. The proposition is considered a first of its kind in the world. To put it simply, the broadcasters will voluntarily sell their spectrum to the US regulator, FCC through a reverse auction. Subsequently, the mobile operators would buy those airwaves through traditional bidding. But the reality will be more complex than that and this article would attempt to address the related complexities.

The FCC first floated the idea of utilizing broadcast TV airwaves for mobile broadband access in the National Broadband Plan of 2010. Two years later, the US Congress authorized the Commission to conduct the incentive auction of the broadcast television spectrum. In the fall of 2012, the FCC issued a Notice of Proposed Rulemaking (NPRM) to officially kick off the rules and guidelines developing process for the 600 MHz auction. The following diagrams illustrate the concept of this auction in terms of how the television broadcast spectrum looks currently and one of the several proposals on what it could look like after the completion of this auction.

Pre and post auction 600 MHz band plan

The values of X and Y as shown above, are variable and obviously depend on the amount of spectrum that the broadcasters are willing to sell. One of the ideas floated by the FCC is the provision to accommodate different amount of TV spectrum relinquished in different markets. The downlink spectrum would be a fixed band nationwide while the uplink band may vary depending on the market. The FCC is hoping that 120 MHz of total spectrum can be made available through this process although the actual figure would be less than this and will be determined by the willingness of TV station owners to give up their usage rights. The first aspect of these incentive auctions would be the reverse auction. Over-the-air active TV licensees holding 6 MHz spectrum in various areas of US will be eligible to participate in the reverse auction. In order to ensure maximum participation, the NPRM states that such licensees would have 3 options. They could either give up the Ultra-High frequency (UHF) channel and relocate to a channel in the Very High Frequency (VHF) range or give up their channel and share a broadcast channel with another licensee post-auction or they can simply sell all their rights to the channel and go off air. In every case, the selling broadcaster could potentially earn tens or in some cases hundreds of millions of dollars in exchange of the spectrum rights in a region. The second aspect would be repacking those broadcast channels that did not participate in this auction and will be on air after the whole process ends. This will ensure that such stations occupy one end of the spectrum resulting in contiguous blocks that could be sold off to the wireless network operators. During the rebanding, the channels would be reassigned and not geographically relocated. There would be no negative impact on the coverage area and served population of a TV station. Final piece of the puzzle would be the forward auction, a process that is generally followed to sell airwaves to the telcos. However, the regulator may follow a new approach to this process, since different areas might open up different amounts of spectrum. Selling spectrum in blocks and keeping flexible uplink spectrum are two such approaches. The pricing of airwaves in a particular region would depend on the success of reverse auction in that region. Another important aspect of the 600 MHz incentive auctions would be the integration of reverse and forward auctions. Both could either run sequentially or concurrently. The sequential path would show the supply through reverse auction to the bidders, but the sellers would be unable to determine the right price, since they would not be aware of the demand during the forward bidding. The concurrent path would show the supply demand balance, but how would repacking fit into that plan?

It is quite obvious that many questions need to be answered before marking a date for this auction. Biggest of them is whether the broadcasters would volunteer to relinquish their spectrum rights. The National Association of Broadcasters (NAB) has shown cautious interest in the auction. They are unsure about the kind of money that can be earned by either exiting the business or going to a shared channel. In comments filed with the Commission last summer, they also expressed deep concern over the co-existence of broadcast and mobile carriers on co-channels and adjacent channels in neighboring markets. They endorsed a nationwide standard band plan rather than an area-dependent approach that maximizes spectrum recovery. The NAB is definitely looking for more transparency in the rules. The FCC itself is still not sure about the success of the auction. The procedure can go belly up right at the start if participation from the broadcasters is low. Remember, if the target is to free up 120 MHz of frequencies, 20 stations will be required to exit the spectrum. Repacking presents another conundrum. Any move to reconfigure the TV stations would be complex and dependent on multiple factors. Apart from time and cost of repacking, interference protection on the new channel would be a major concern. There is no dearth of controversies on the wireless operator side too regarding these auctions. Bigger carriers like AT&T and Verizon want an open and simple bidding mechanism with no spectrum caps. Sprint, T-Mobile and other smaller rural carriers want an upper limit on the amount of airwaves that a bidder can buy. They claim that AT&T and Verizon already control more than three-fourth of commercial wireless spectrum below 1 GHz. Thus such a limit would promote consumer interest and encourage competition. Nonetheless, restrictions on spectrum bidding would reduce government’s revenue. There are divergent views on the channel block size and the size of economic areas (EA) too, although the spectrum is likely to be auctioned off in 5 MHz blocks. Appropriate utilization of the guard band frequencies is one more contentious topic. Internet companies like Google and Microsoft want unlicensed operations in that band, while the mobile telcos support only limited unlicensed spectrum. Given so many unresolved problems, the FCC delayed the 600 MHz incentive auctions until middle of 2015.

The regulator clearly needs to address issues of all stakeholders, but to be fair, this is an unprecedented situation and it is important to get it right even if that requires more time and discussion. The original plan was to have the order for this unique auction out by this spring, but that looks improbable now. The regulator must assuage the concerns of broadcasters in the order.  Rules and guidelines must be transparent with a well-defined structure. The barriers to entry must be low and TV spectrum owners should be educated about the approximate amount of dollars that they can expect in exchange of their 6 MHz of spectrum. They must be encouraged to explore the channel sharing option too. A recent pilot project conducted by 2 stations in Los Angeles concluded that sharing the same broadcast spectrum is technically feasible. Also as part of the order, the repacking methodology must be clearly laid out with specific timelines and costs involved. Various technical parameters like interference protection should also be outlined. Broadcasters must be assured that repacking will not affect their services in any manner and to further convince them, they should be allowed to test the repacking model. The station owners should be made to understand that since less than 10% of US households completely rely on over-the-air television, the spectrum they are holding can be utilized more efficiently if allocated for wireless data services. The other key policy challenge is on the forward auction side. There are valid arguments both in favor of and against imposing restrictions on spectrum that be bought by a bidder, so a balance has to be struck to ensure maximum participation and a level playing field. Lastly, the software and systems have to be extensively tested before commencing the complicated process.

There is clearly a long road to travel before these auctions can be held. There have been some positive developments like the formation of Expanding Opportunities for Broadcasters Coalition (EOBC). EOBC represents broadcasters that are interested in these auctions and want to be a part of the rulemaking process in order to make this endeavor a success. But much more needs to happen. A well-designed competitive sale process encompassing all three stages is what the industry needs and if executed well, it can bring rich benefits to the consumers, promote competition and boost the economy. A successful auction would also influence other nations to follow suit. Now there is only shot at getting it right. The FCC seems to be working hard at it and basic idea sounds good, so let us hope for a result that is in best interests of all the stakeholders.



4G Spectrum Auction Will Determine Winners and Losers in the UK Mobile Market

28 Jan

­The auction of coveted 4G spectrum that is now underway in the United Kingdom represents a critical juncture for country’s wireless market, with the winners set to gain access to data bandwidth essential for meet burgeoning demand for mobile data services.

Chiefly driven by smartphones, U.K. mobile data traffic will rise by more than 400 percent from 2012 to 2016, according to a new report from IHS. They forecast mobile data traffic in the country will rise to 1.4 billion gigabytes in 2016, up from 274 million gigabytes in 2012.

The auction features 2.6Ghz spectrum best suited for urban deployments and scarce spectrum at the 800MHz band, which is especially suitable for delivering wireless services in rural areas. This makes 800MHz desirable for any nationwide deployment of 4G.

“The importance of this spectrum auction in shaping the future of the U.K. wireless market cannot be understated,” said Daniel Gleeson, mobile analyst at IHS. “Access to spectrum is the main barrier to entry for any company looking to build a new wireless network. The amount a company spends in the auction will affect their business performance for years to come. Seven companies are bidding for spectrum: the country’s four existing mobile operators along with three new players. With only three companies likely to win spectrum, at least one of the United Kingdom’s existing operators is likely to lose out.”

Bidders Play Mobile Musical Chairs

The four existing players that have entered the auction are EE, O2, Vodafone and Three. The three new entrants are BT, PCCW and MLL Telecom.

Other European spectrum auctions have only seen a maximum of three operators win 800MHz spectrum. The United Kingdom could follow this pattern, yielding three winners and four losers.

“The winners will have the bandwidth required to keep pace with the boom in mobile data — while the losers will struggle to remain competitive in the mobile market,” Gleeson noted.

Data Explosion

Much like other developed markets, the United Kingdom has seen massive growth in smartphone users during the past five years. This, combined with a steady take-up of large screen mobile broadband services, is causing a substantial increase in data traffic carried by the mobile operators.

The 800MHz Question

Different types of spectrum have varying propagation characteristics. Lacking spectrum in certain bands effectively limits an operator to urban areas. For an operator to succeed, it must have a spectrum portfolio with both breadth and depth.

The U.K. auction is offering spectrum in two bands; the 800MHz band and the 2.6GHz band. The longer wavelengths associated with transmissions at the 800MHz band mean signals travel further resulting in larger cells, fewer cell sites for operators and therefore lower deployment costs to serve rural areas. The 800MHz cells are approximately 10.5 times larger than 2.6GHz cells transmitting with the same power. This makes 800MHz much more valuable than the 2.6GHz band.

The Stakes

Among the existing mobile operators, the companies with the most to lose are O2 and Vodafone, which presently do not have 4G spectrum.

Not securing 800MHz licenses would be a disaster for O2 or Vodafone as their current licenses do not allow for the deployment of 4G, and relying on 2.6GHz spectrum would severely limit their capability to cover most of the country.

The Consequences Beyond 4G

While the deployment of 4G services will be the primary outcome from the auction, spectrum auctions have a habit of rearranging all the deck-chairs in the mobile market in a particular country. The past few years has seen cooperation between the operators in site-sharing deals in order to reduce costs while simultaneously expanding potential coverage.

These relationships are based around having similar needs due to similar spectrum holdings, so it’s clear that changing the spectrum holdings could lead to different joint ventures. Particularly in an era of economic uncertainty, operators will be on the lookout for ways to minimize the cost of rolling out services. Extra sites may be needed if an operator is aiming to use 2.6GHz exclusively in urban areas or if an operator with limited geographic coverage i.e. Three, is attempting to build out a more comprehensive network or of course there is a new entrant like BT.


UK’s 4G Spectrum Auction Begins

25 Jan

U.K. telecoms regulator Ofcom today announced the the 4G auction is underwaywith bidding to acquire up to 250 MHz in the 800Mhz and 2.6GHz bands. The total reserve price for the spectrum has been set at £1.36 billion — but the U.K. Treasury has already factored £3.5 billion from the spectrum sale into its policy decisions,reports TechCrunch.

Currently, only Everything Everywhere offers LTE service in the U.K., using their refarmed 1800 MHz band. Competing mobile operators Telefónica UK (O2),Vodafone UK and 3 will be able to start playing catch-up with rival Everything Everywhere.

The bidding process for the extra spectrum will be conducted in secret. Companies taking part in the auction are:

  • Everything Everywhere: 27.2 million subs, owned by France Télécom aka Orange (50%) and Deutsche Telekom (50%).
  • PCCW, a major Hong Kong telecoms conglomerate, operating through its subsidiary HKT
  • 3: 8.2 million subs, owned by Hong Kong-based Hutchison Whampoa
  • MLL Telecom, a telecom network supplier founded in 1992 and based in Marlow, Buckinghamshire
  • BT, via its subsidiary Niche Spectrum Ventures
  • O2: 22.3 million subs, owned by Telefónica, a Spanish broadband and telecommunications provider
  • Vodafone: 19.2 million subs, owned by Vodafone, headquartered in London.

The seven parties are bidding for 28 lots of spectrum in the 800-MHz and 2.6-GHz bands. In total there is 250 MHz of spectrum up for grabs, compared with the 333 MHz already in use in the U.K.

The UK has decided to break the 190 MHz-wide band of 2.6 GHz frequencies into two groups, 140 MHz of paired frequencies and 70 MHz of unpaired.

The winners won’t be named for a “number of weeks”, and no updates on bidding activity will be provided during the process so that bids remain confidential to reduce the risk of strategic bidding distorting the outcome.

Once the winners are determined, and fees are paid, licences will be granted — with carriers then able to start rolling out new 4G networks. Ofcom is expecting that services will be launched by a range of providers from late spring/summer 2013.

Global LTE subscribers will pass 100 million in 2013, according to IHS iSuppli, more than doubling the 2012 numbers, and hitting 198 million by the end of 2013.

By 2016, LTE will claim more than 1.0 billion users, as shown in the figure above, equivalent to a five-year compound annual growth rate of 139 percent.

According to Wireless Intelligence, the five largest mobile operators in the world areChina MobileVodafoneAmérica MóvilTelefónica, and Bharti Airtel. They all have over 200 million subscribers each, about twice the size of AT&T or Verizon Wireless in the United States.


BT Set to Enter the UK’s 4G Network Frequency Auction

3 Jan

FCC Dishes Dirt, Talks Up 3.5 GHz

27 Nov

Dish Network’s proposal for a mobile telephone network would destroy the value of airwaves the government plans to auction for commercial use,the Federal Communications Commission said today.

Dish wants to use all the MSS frequencies it purchased from defunct satellite operators for nationwide terrestrial LTE service. But the FCC wants to auction the H block, which is adjacent to the Dish spectrum. That could cause mutual interference.

Dish calls the draft “significantly flawed”; adding years of delay and eliminating competition. Ericsson can deliver 223 Mbps on 40MHz of spectrum.

AT&T and Verizon can’t touch it. They don’t have the greenfield spectrum.

Sprint’s filing with the FCC called for the FCC to shift Dish Network’s AWS-4 band up 5 MHz from 2000-2020 MHz to 2005-2025 MHz so their planned adjacent “H block” of PCS spectrum can be used for LTE. Sprint wants to use the entire 1990-2000 MHz block (two 5 MHz chunks). But that would adjoin Dish’s spectrum and cause mutual interference.

Sprint-Nextel claims that if the FCC were to limit their proposed “H Block” to only small cell use, it would not likely bid on the spectrum. Dish has argued that a “full power” H Block would cause at least 25 percent of its uplink frequencies (2000-2020 MHz) to become unusable, a claim Sprint has said is erroneous. Sprint says it is open to hosting Dish with their Network Vision architecture – but only if Dish were bumped up 5 MHz (2005-2025 MHz).

“In arguing that the commission should destroy the value of the H block, Dish is seeking to take a public asset potentially worth billions of dollars and turn it into a private windfall,” Justin Cole, an FCC spokesman, reports Bloomberg.

“This is not windfall; it’s a venture where success is by no means assured,” said Bob Toevs, a Dish spokesman. “While we remain ready to work with the commission, we urge it to consider the sacrifices its current approach to the H block means for spectrum, jobs and investment.”

Genachowski’s proposal awaits a vote by the five-member FCC.

Congress directed the FCC to auction the H block (Greg Walden loves to micro-manage), and by limiting Dish, the FCC can generate more revenue to help pay for a planned nationwide radio network for emergency workers, FirstNet.

In other news, the Commission will consider a Notice of Proposed Rulemaking to broaden its initiatives in unleashing broadband spectrum, promoting technological innovation, and encouraging investment via the creation of a shared access broadband service in the 3550-3650 MHz band for small cell use.

According to the President’s Council of Advisers on Science and Technology, some 1000 MHz of federal spectrum, especially in bands above 2.7 GHz, may be shared using White Space interrogation technology.

The Whitehouse PCAST spectrum report (pdf) promotes expanded spectrum-sharing technologies, originally developed for unused “white space” tv frequencies.

The 3550-3650 MHz band is mostly used by Navy radar. Using the techniques pioneered by White Space receivers, devices will be able to share the frequencies with the government if they incorporate geographic location information and interrogate data bases before they transmit.

The Wireless Innovation Alliance made a noble defense for unlicensed use of the band (like WiFi), saying, “We agree with PCAST that expanding on the TV White Space database approach holds immediate promise for opening the underutilized 3550-3650 MHz band for unlicensed devices and encourage the FCC and NTIA to make implementation a priority.”

According to the Wireless Innovation Alliance, one quarter of the world’s households and tens of millions of businesses have deployed Wi-Fi networks to deliver broadband Internet access. Wi-fi increases the economic value of fixed broadband connections by $99 billion a year.

The Wireless Internet Service Providers Association (WISPA) says the FCC should make the 3550-3650 megahertz band available through the same “licensed-light” regime as it did the 3650-3700 MHz band, which would allow wireless Internet service providers (WISPs) to use the frequencies.

Commercial carriers are not big on sharing. On AT&T’s Public Policy Blog, Joan Marsh, the operator’s vice president of federal regulatory, said, “While we should be considering all options to meet the country’s spectrum goals, including the sharing of federal spectrum with government users, it is imperative that we clear and reallocate government spectrum where practical.”

CTIA, the cellular industry association, said “the gold standard” for deployment of ubiquitous mobile broadband networks is cleared spectrum.

For them.


FCC planning to auction off additional UHF spectrum to mobile carriers

11 Sep

Mobile broadband is on the rise, but with carriers trying to offer better and faster services, there is a resource that might go scarce soon: radio spectrum allocation. Most technologies today can support the network load through code-division, which lets data and voice packets share the same space, bandwidth permitting. However, as the need for “ubiquitous mobile Internet coverage” arises, the FCC feels the need to be proactive in allocating for these resources as demand grows.

FCC chairman Julius Genachowski says the move will encourage broadcasters to sell the unused spectrum that they own. As an alternative, broadcasting companies can can or move to alternative frequencies more adequate for broadcasting, such as VHF, which is not adequate for mobile telephony.

To ensure ongoing innovation in mobile broadband, we must pursue several strategies vigorously: freeing up more spectrum for both licensed use and for unlicensed services like Wi-Fi; driving faster speeds, greater capacity, and ubiquitous mobile Internet coverage.

The proposed rules on said auction have been circulated among FCC commissioners for discussion on September 28. While the effects of the said move will not likely be immediately felt by consumers, this will be beneficial in the long run.

“The auctions will yield innumerable benefits for American consumers to access wireless broadband and ensure that devices such as smartphones and tablets can continue to connect to those networks,” said Julie Kearney, vice president of the Consumer Electronics Association, the standards and trade organization that runs the annual Consumer Electronics Show every January.

Will a reallocation of the radio spectrum result in better services and faster mobile broadband speeds? That will be up to the mobile carriers and regulators. But as consumers, it’s up to us to be vigilant that we get reasonable service for what we pay.

Source:  by J. Angelo Racoma on Sep 10, 2012

Mixed industry reaction to Ofcom’s UK 4G announcement

26 Jul

Rating: Most observers see Brits as 4G laggards

There’s been a mixed reaction to yesterday’s [July 24th 2012] announcement by UK telecoms governing body, Ofcom, to plans to finally auction spectrum for use by 4G style networks. What most observers seem to have missed is the fact that there’s no compunction to use LTE – the standard favoured by telecoms companies, over WiMAX – which IT orientated suppliers seem to prefer. There’s also no clear guidelines about what Ofcom intends to do about Everything Everywhere’s (EE’s) attempts to use existing 1800 MHz for 4G purposes. Instead Ofcom has hinted very heavily that two internationally recognised parts of the spectrum – 800 MHz and 2.6 GHz will be made available.What is it with the cellular industry? We’ve finally seen an end to the in-fighting between cdmaOne and GSM based networks where both sides agree on using LTE. Well, mostly anyway.

Now we’re looking at LTE handsets potentially having to be at least tri-band, if not quad-band or above.

This will always add to the cost of the handset. But then, how many consumers were ever aware that they own a quad-band GSM handset?

As Thomas Wehmeier, principal analyst for Telco strategy at Informa Telecoms & Media observes, “The auction proposal set out by Ofcom means that the UK will not see 4G LTE services go live until later in 2013 at the earliest, putting UK mobile consumers almost four years behind the world’s leading 4G markets.

To put things in context, 4G adoption in Korea has already reached 17 per cent of mobile users today. By the time the UK takes its first baby steps forward in 2013, it’s reasonable to expect that Korea will have taken a giant leap towards 50 per cent adoption.”

That’s the bad news. So what’s the good news? Well, UK mobile operators and consumers alike will benefit from the fact that 4G in Q3-Q4 2013 will be a more mature technology.

That means a greater range of devices and significantly lower equipment costs due to increasing economies of scale. If we don’t get beyond quad-band, that is.

Wehmeier continues, “Ofcom’s decision to reserve spectrum for a fourth national network operator means that Hutchison 3G is the most likely candidate.

But there are other wildcard options that could also be waiting in the wings and ready to swoop.

The UK largest fixed broadband media players, including BT, Virgin Media, Sky and TalkTalk, all represent credible, if less likely, alternative bidders.”

Ah, who remebers the days of Japanese bank Nomura, entering the auction for UK 3G spectrum.

GoMobile News does because a colleague of ours advised the Bank on the top price to pay. By co-incidence O2 later claimed that exact figure is what it should have bid and it had overpaid.

Lee Myall, UK director at Interoute, takes a very different slant to Ofcom’s announcement. He believes that the whole cellular industry should focus more on using Wi-fi to offload data from cellular networks.

Myall says, “The industry as a whole needs to be taking responsibility for offloading data wherever it is possible. Using Wi-fi hotspots will not only take the pressure off 4G, but keep consumer phone bills down too.”

Hmm. By contrast, GoMobile News sees 4G as carrying a lot of Wi-fi traffic as 4G enabled mobile device owners utilise their 4G connexion to create a ‘tethered’ Wi-fi hot spot.

All we can say is, hurry up guys. Everybody wants 4G now, not in December 2013.

July 25, 2012 by Tony Dennis – Source:


UK 4G auction reserve prices proposed, process continues (slowly)

26 Jul

Regular blog readers will be familiar with the long-running saga of the UK 4G auctions. (If you are looking for a speed read, these Ofcom media briefing slides give a rose-tinted view of the current status).

On Tuesday this week Ofcom published a statement setting out its decisions on various outstanding issues  and a draft Information Memorandum for bidders.


Promoting competition

Ofcom has decided that in order to achieve their policy objective of promoting competition that they should promote competition at the national wholesale level. Ofcom consider that three operators is insufficient to provide that competition and as a result decided to:

(a) reserve a spectrum package for an operator other than Vodafone, Telefonica and Everything Everywhere. They have somewhat modified the available portfolios from the consultation:


(b) impose safeguard caps  to prevent highly asymmetric spectrum holdings. They have confirmed the safeguard caps proposed in the prior consultation of an overall spectrum cap of 2 x 105 MHz and a sub-1GHz cap of 2x 27.5 GHz.

Ofcom has also decided not to reserve any 2.6GHz spectrum for low powered shared use, instead leaving it to the auction process to decide whether this would be an economically optimal outcome.

Promoting mobile broadband availability

Following earlier consultation, Ofcom has decided to include a coverage obligation in one of the 800 MHz licences. The obligation will be to provide mobile broadband coverage for indoor reception to users in an area within which 98% of the UK population live and 95% of the population in each of the region (this in intended to ensure that the UK-wide 98% is not met by 100% coverage in English towns and poor coverage in rural Scotland). This coverage is to be achieved by 31 December 2017.

Indoor mobile broadband coverage is referred to loosely in the summary by reference to enabling most households to get at least 2 MBit/s speeds. The detailed definition is rather more technical:

 ”the service must be provided using radio equipment which is not situated inside the relevant residential premises;

[…]  the radio signal propagation loss from the outside of the building to the location inside the building does not exceed:

a. 13.2dB for radio signals in the frequency ranges 791MHz – 821MHz and 832MHz – 862MHz;

b. 13.7dB for radio signals in the frequency ranges 880MHz – 915MHz and 925MHz – 960MHz;

c. 16.5dB for radio signals in the frequency ranges 1710MHz – 1785MHz and 1805MHz – 1880MHz;

d. 17.0dB for radio signals in the frequency ranges 1900MHz – 1980MHz and 2110MHz – 2170MHz;

e. 17.9dB for radio signals in the frequency range 2500MHz – 2690MHz;

f. Any other propagation loss notified to the Licensee by Ofcom in respect of radio signals in any other frequency band.”

For more details as to how this will be assessed see this Notice of Compliance Verification Methodology. It will be interesting to see what compliance with this condition looks like in practice – I’d welcome comments from any radio propagation experts reading this.

Spectrum Packaging and Auction design

Ofcom have decided to use the following lots:

  • a 2 x 10MHz lot for that part of the 800 MHz band with the coverage obligation;
  • 2 x 5 MHz for the remainder of the 800 MHz band;
  • 2 x 5MHz lots for the paired 2.6GHz; and
  • 5 MHz for the unpaired 2.6 GHz spectrum.

The auction will be a combinatorial clock auction.

Reserve prices

 Ofcom have set the follow reserve prices:


Licence Condition and DTT Co-Existence

The licences will be UK wide, technology and service neutral and (with some caveats) tradeable. They will be indefinite in duration, although terminable on five years notice after the first twenty years.

There are a number of technical condition and additional conditions and proposals to deal with DTT co-existence.

Annual Licence Fees for existing 900 MHz and 1800 MHz spectrum

Rather unhelpfully, Ofcom indicate that they do not propose to formally consult  or decide on their approach to annual licence fees for existing 900 MHz and 1800 MHz spectrum until after the auction (leading to significant valuation risk) but they have shared their current view:

“170. We have summarised responses to our January 2012 consultation and our view of those responses in Annex 12. Having considered those responses, we remain of the view expressed in the January 2012 consultation that it is likely to be appropriate to draw on evidence from the following three methodologies to estimate full market value:

a) the linear reference price methodology described in the March 2011 consultation, using all bids made in the UK Auction;

b) the Additional Spectrum Methodology described in paragraphs A13.66 to A13.75 of the January 2012 consultation; and

c) values from Auctions for comparable spectrum in other countries that we consider to be sufficiently competitive, adapted to reflect UK circumstances. This is likely to include considering the relativities of different frequencies in Auctions where multiple frequencies were sold (as described in Annex 12)

12.8 We are not ruling out using technical and cost modelling in addition to inform our decision on ALF levels. As we set out in the March 2011 and January 2012 consultations, spectrum values derived from technical and cost modelling are subject to a considerable margin of error and such modelling may therefore be of limited value. We will review the position on this after the Auction to consider whether such modelling is likely to result in information which is more reliable than that from other sources.

12.9 We recognise that we need to consider the calculations under each methodology and their outputs with care. They have some limitations both individually and in combination. However, by using a broad set of evidence, and by using market information in particular, we believe that our approach is likely to be appropriate to the circumstances. We believe that considering these three methodologies together sufficiently addresses the risks that might be introduced by a mechanistic link between Auction prices and ALF, while still allowing us to use a range of information to estimate full market value.”

Next steps and timeframe

Finally, and very disappointingly, the statement signals yet a further delay in the process, with Ofcom only indicating that they will invite applications to take part before the end of 2012, meaning that the auction is unlikely to take place until 2013.

Posted on July 26, 2012 by Rob Bratby


UK’s LTE auction pushed out again, to 2013

25 Jul

Regulator sets £1.4bn reserve, earmarks spectrum for fourth player, and sets coverage targets for 800MHz

The UK’s much postponed 4G spectrum auction will not now take place until 2013, although regulator Ofcom has come closer to clarifying the rules, particularly in reserving some frequencies for a smaller player.

Ofcom had not set a specific date but had indicated it would sell the licences, in 800MHz and 2.6GHz, before the end of 2012. But now it says that, although the process will kick off before year end, spectrum will not actually be allocated until 2013, delaying roll-outs until the later part of that year. This leaves the UK – once expected to be the first European country to sell 2.6GHz licences – well behind other large economies like France and Germany, let alone the 4G frontrunners in Scandinavia.

The UK auction has been delayed multiple times by disputes and legal challenges arising from its complex and atypical spectrum situation. In particular, only two operators – Vodafone and O2 – have GSM networks in 900MHz, while Everything Everywhere runs 2G in 1.8GHz. Since cellcos are keen to acquire sub-1GHz frequencies because of their suitability for rural coverage and indoor penetration, EE has argued that its two rivals should be capped in the amount of 800MHz spectrum they can buy.

Another difficult issue has been the position of 3UK, the fourth cellco, which has no GSM spectrum, and has argued that it must be allowed to secure sufficient 800MHz frequencies to remain viable against the other three. In fact, Ofcom has finally decided to reserve some spectrum for a fourth national operator, other than the big three – which could be 3UK or a new entrant. Several media players have been testing LTE or expressing interest in mobile networks, including cableco Virgin Media and satellite broadcaster BSkyB. Incumbent wireline carrier British Telecom could also enter the fray, probably as a wholesaler.

According to the new timetable, interested parties will be invited to apply to participate in the auction before the end of 2012 and once Ofcom has approved the bidders, the sale will take place in early 2013. The regulator points out that this still allows time for commercial services to launch during 2013, hitting its previously stated timelines.

One of the 800MHz licences will include the obligation to provide indoor mobile broadband coverage for at least 98% of the population by the end of 2017 (with at least 95% in each of the states of the UK, England, Scotland, Wales and Northern Ireland). Ofcom envisages that this licence will cover more than 99% of the population outdoors.

The final stage of statutory consultation on the auction will close on September 11. The further delay will increase the pressure on Ofcom to allow Everything Everywhere to deploy LTE as early as this year, in its existing 1.8GHz 2G spectrum. This proposal has come under fire from Vodafone and O2, which say it would give EE an unfair headstart, though the Orange/T-Mobile joint venture does have to sell off about 25% of its 1.8GHz frequencies as a condition of its merger, which could give a similar chance to another cellco. 3UK has indicated it will support the plan if it is given access to the resulting EE network (it already has a RAN sharing joint venture with the larger operator).

Ofcom has also set out reserve prices for the first time, which total £1.4bn (or £1.6bn including EE’s 1.8GHz spectrum, which could be sold at the same time or in a separate private transaction). Analysts are talking about figures around £4bn for the final proceeds.

Thomas Wehmeier, principal analyst for telco strategy at Informa, commented: “The UK is already seen as Europe’s most complex and fragmented telecoms market and it now looks set to add another unwanted title to its repertoire as a European 4G laggard.”

CAROLINE GABRIEL – Published: 24 July, 2012


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