WiMAX still features in UK spectrum policy as consultation starts

By Caroline Gabriel

The UK is undergoing one of Europe’s most radical - though often tortured - reviews of spectrum strategy, with proposals that will set important precedents for other parts of the region and for universal broadband plans using wireless. With the picture further complicated by the plan for Orange and T-Mobile to combine their UK arms, possibly breaking planned spectrum caps, the government has embarked on the next stage of the process, a consultation on the recommendations by Kip Meek, the Independent Spectrum Broker (ISB), on how to make the optimal use of existing and future spectrum allocations.

Stephen Timms - the UK’s Minister for Digital Britain (the country’s universal broadband initiative, which looks for heavy involvement from the five 3G carriers) - said in a statement: “This package will free up the airwaves for the expansion of wireless and 3G services, increasing their reach to consumers and businesses across as much as 90% of the country, including rural communities.”

Meeks’ final proposals, published today, resolve some technical issues arising from his original report of May 2009. The government aims to implement these revised recommendations through a directive to regulator Ofcom, subject to a consultation period that runs from today until January 8, 2010.

There are four key proposals, which are being closely studied by EU and national European authorities. First, the 3G license term will be made indefinite to encourage higher investment in advanced services and extend coverage to 90% of the population. An annual fee will be applied, reflecting market value, from 2021.

Second, Ofcom will free up the 800 MHz digital dividend spectrum as soon as possible and this will be auctioned in coordination with the much delayed sale of 2.6GHz licenses. The UK was once expected to sell 2.6 GHz frequencies ahead of any other European country, at least two years ago, but is now lagging behind.

This has been seen as a blow to WiMAX, which had hoped to take advantage of early auctions to gain a foothold in a major western European economy, possibly at incumbent BT (which lacks a wireless arm of its own). However, the latest Meeks proposals keep hopes high for WiMAX, stating that 2.6 GHz will be “aimed at the use of TDD for WiMAX networks”. This suggests that the UK will expect extensions of FDD services to take place in lower bands - refarmed GSM spectrum and 800 MHz - with the higher frequency reserved for high capacity data applications as well supported by TDD. It may also suggest that the 3G carriers have lost some interest in 2.6 GHz because of the lower frequency options, so the band may be used to encourage new competitors and new types of services.

Although LTE is developing a TDD version, mainly for China Mobile, WiMAX is currently the main TDD option. Ofcom has generally taken the view that spectrum auctions should allow carriers to decide on their FDD/TDD mix according to market needs.

Third, there will be coverage conditions for any operators using 800 MHz or the refarmed 900 MHz GSM spectrum for mobile broadband, to ensure rural coverage.

Fourth, the proposals include liberalizing existing 2G licenses in 900 MHz and 1.8 GHz to make these indefinite and tradeable. Operators will then be able to reallocate their spectrum for 3G or even 4G but Vodafone and O2, the holders of 900 MHz, will not be forced to give up some spectrum upfront to their rivals, as previously suggested.

Caps for the combined auction will be set - a temporary cap on overall mobile spectrum per operator will be 2 x 65 MHz, with a second temporary cap on current holders of sub-1GHz licenses at 2 x 17.5 MHz. Any bid for additional sub-1GHz frequencies that is successful will require the holder to give up an amount of 900 MHz spectrum, equivalent to the amount purchased in the analog TV band. A third temporary cap will be on overall 2G spectrum, so that an operator with more than 2 x 25 MHz, which acquires new spectrum in the combined auction, will have to relinquish 2 x 5 MHz into the auction. This could have implications for a merged T-Mobile/Orange, which holds no 900 MHz spectrum but would have a heavy concentration of the UK’s 1.8 GHz licenses.

UK 2.6 GHz auction pushed back again, to 2010

By Caroline Gabriel

The UK, once set to be the first European country to auction 2.6 GHz spectrum for ‘4G’ services, is delaying its spectrum sale yet again. In November, regulator Ofcom indicated it hoped to award licenses by mid-2009, and in April it said it promised to hold the auction “as soon as possible”. Now it has “withdrawn” that statement and, in the wake of the new Digital Britain report recommendations, will bundle the 2.6 GHz and digital dividend spectrum sales into one super-auction next year.

The delay is a further blow for operators that had hoped to steal an early march in mobile broadband, especially those aiming to challenge the cellular incumbents, possibly with a WiMAX network. While a few countries, notably Sweden, have sold 2.6 GHz licenses, most auctions will take place in 2010, as operators create strategies that also take account of the sale of analog TV spectrum around 800 MHz; possible broadband stimulus initiatives in some markets; and the ruling, by many regulators, that 3G services can be expanded using current GSM frequencies around 900 MHz.

Existing cellcos argue that they can only reach a meaningful valuation of the 2.6 GHz licenses when the rules on all these other factors are made clear. This was one reason for the initial delays of the UK auction, which was once expected to have taken place over a year ago. It was held up by legal challenges by T-Mobile and O2, which sued Ofcom for trying to sell the licenses before it had completed its rulemaking on refarming 900 MHz GSM spectrum for 3G – something that could reduce 3G carriers’ need for 2.6 GHz licenses, and certainly affect the spectrum’s value.

The Digital Britain report has further complicated the UK auction picture, stating that it intends to implement the proposal of the independent spectrum broker to hold at least part of the 2.6 GHz sale together with the award of the 800 MHz band.  ”In light of the Government’s intention to implement the ISB’s proposals, including possibly directing us in this regard, and the further period of time which will elapse before any such direction is made, Ofcom considers that it is no longer appropriate to rely on its decision of 4 April 2008 to hold the award of the 2.6 GHz band as soon as possible,” the regulator said.

The UK auction is potentially the most significant sale of 2.6 GHz licenses in the EU, because it is the most open to a new technology such as WiMAX and is regarded as a bellwether for various reasons. Ofcom has been more aggressive than many fellow regulators about opening up new bands with as few regulations as possible in order to encourage new services and new operators. And, unusually among European states, incumbent telco BT has no wireless networks, but is widely expected to re-enter the wireless market – which it quit when it spun off its mobile arm, now Telefonica-owned O2 – via a 2.6 GHz license. It has shown a strong interest in WiMAX, and so could be the technology’s route to a national network in the heartland of 3G and LTE. Also of interest to the WiMAX community is Ofcom’s stance that it will leave 2.6 GHz winners to decide whether to implement TDD or FDD networks, according to their business models, rather than defining the split between the two profiles, as most regulators are doing. This could make a license more attractive to a data-driven carrier, since TDD spectrum is advantageous for this model.