UK considers spectrum caps to break 900MHz deadlock
Published: 14 May, 2009
The long running battle over the reallocation of GSM spectrum in the UK may be close to resolution, a move that would then open the country to finalize rules for auctioning 2.6GHz and digital dividend licenses.
The UK regulator Ofcom has published an independently commissioned report that suggests a new approach to the redistribution of some 900MHz GSM spectrum held by Vodafone and O2, to Orange and T-Mobile (whose GSM services run in a higher band). This would be a prelude to allowing the refarming of 900MHz for 3G or LTE, especially geared to making it easier and more cost effective to deliver mobile broadband to rural areas. Expanding HSPA to sparsely populated areas underserved by wired DSL or cable is a key element of the UK government's universal broadband plan, which will be boosted by state funding once the spectrum disputes are resolved.
Ofcom wanted to resell the 900MHz spectrum that was given up by Vodafone and O2, to generate new revenue, but is now looking at a compromise deal revolving around caps. This compromise, proposed by Independent Spectrum Broker, would allocate a spectrum cap to all five cellcos (including 3, which does not have GSM services and was not involved in the original redistribution plans). Any company seeking to buy additional radio spectrum would have to sell some of their existing holdings if the new purchases would go beyond the cap.
This would mean that the 900MHz holders would almost certainly have to give up some of these frequencies if they wished to bid for 2.6GHz or digital dividend (around 800MHz) licenses. The ISB said the existing spectrum owners could be offered indefinite ownership of the spectrum if they extended 3G coverage and allowed infrastructure sharing. Under the proposal, operators seeking to obtain 800MHz spectrum would be forced to give up an equivalent quantity of 900MHz spectrum. Ownership in 2.6GHz would be capped at 2x60MHz for one year from the date of the auction.
Ronan Dunne, CEO of Telefonica O2 UK, said: "This report is a significant step forward in making Digital Britain a reality and is good news for UK plc. Spectrum allocation is a complex question." Ofcom will publish its response to the report next month.
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