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UK Public Sector Spectrum Release: Award of the 2.3 and 3.4 GHz spectrum bands

In a Statement and Consultation published on 26 May 2015, Ofcom, the UK telecoms regulator, published updated plans on the release of spectrum in the 2.3 and 3.4 GHz spectrum bands and it opened a consultation on options for proceeding with the award in light of potential changes in the mobile market in the UK.

The 2.3 and 3.4 GHz award bands will be released by the Ministry of Defence (MOD) as part of the Government’s Public Sector Spectrum Release (PSSR) programme to make 500 MHz of spectrum available for civil use by 2020.

Having considered the responses to its previous consultation on auction design and licence conditions, Ofcom has decided:

  1. to conduct the 2.3 and 3.4 GHz award using a Single Multi-round Ascending (SMRA) auction process;
  2. to auction the spectrum in the 2.3 GHz band in lot sizes of 10 MHz ad the spectrum in the 3.4 GHz band in lot sizes of 5 MHz; and
  3. to impose technical licence conditions to avoid interference between neighbouring users. For the 3.4 GHz band, Ofcom considers that this band should be synchronised. If a licensee choses not to adopt a specified structure they would need to use a restrictive mask. With a maximum of 40 MHz of spectrum available in the 2.3 GHz band – and an optimal carrier size of 20 MHz for LTE – Ofcom has decided to mandate full synchronisation.

Concerns had previously been raised regarding the potential for interference from 2.3 GHz LTE mobile broadband to users of licence-exempt spectrum in the nearby 2.4 GHz. After extensive testing, Ofcom has assessed the risk as low, and where interference does occur it is likely to be caused by licence-exempt users “listening in” to signals from outside its designated band, and not from LTE causing interference to the licence exempt band.

Non technical licence conditions are as follows:

  • Licences will be issued for an indefinite period with an initial term of 20 years;
  • Licences to be issued on a non-exclusive basis;
  • The 2.3 GHz licences will cover Great Britain (i.e. England, Scotland and Wales, but not Northern Ireland)[1];
  • The 3.4 GHz licences will cover the whole of the UK;
  • Licences will exclude territorial seas and areas of adjacent internal waters, although individual requests will be considered;
  • The spectrum will be tradable under the provisions of the Mobile Trading Regulations; and
  • There will be no coverage obligations or use-it-or-lose-it obligations placed on licences.

As a result of (i) BT’s announcement of its intention to acquire EE; and (ii) Hutchison Whampoa (owner of the H3G network i.e., ‘Three’) announcement that it had reached agreement to acquire O2 from its current owner Telefonica, the UK wholesale mobile market is likely to be reduced from four operators to three. Ofcom therefore decided to consult on whether or not it should withhold some of the available spectrum from the 2.3 and 3.4 GHz award. It would proceed with an auction of the bulk of the available spectrum and award any withheld frequencies at a later date, in light of market conditions. Ofcom is of the view that this is preferable to a) delaying the auction until market conditions are clear; or b) proceeding with an auction of all of the available spectrum. It is proposed that it would be appropriate to withhold around 60 MHz of the 190 MHz of spectrum available. However, stakeholder views are invited. The consultation closes on 26 June 2015.

[1]               Exclusion zones will apply in The Hebrides, Isle of Skye and The Small Isles