Topic 8: Access to electromagnetic spectrum
Background
163.Availability of next generation mobile broadband services requires the availability of spectrum. There are suitable blocks of spectrum either ready for allocation, or about to become available, namely spectrum at 2.6 Gigahertz (GHz) and 800 Megahertz (MHz) otherwise known as the Digital Dividend, available as a result of digital switchover. Attempts by OFCOM to bring this spectrum to market have, however, been subject to delay due to issues around spectrum used for delivery of second generation (2G) mobile services.
164.These issues are complex and revolve around the change of use of spectrum at 900MHz and 1800MHz, known as spectrum liberalisation. To date, the use of 900MHz spectrum has been constrained to providing second generation (2G) mobile services because of the terms of Directive 87/372/EEC (on the frequency bands to be reserved for the co-ordinated introduction of public pan-European cellular digital land-based mobile communications). This Directive has now been amended by Directive 2009/114/EC to allow these spectrum holdings to be used for Universal Mobile Telecommunications Systems (UMTS, a third generation (3G) mobile technology). The UK is required to implement this change by May 2010. The revised Directive requires Member States to look at whether competitive distortion results from these changes. OFCOM’s view was that there was an issue and they proposed the reallocation of some spectrum. But OFCOM have been unable to agree with operators how this will be achieved. In parallel, the UK also has to implement a Radio Spectrum Committee Decision that allows the use of 1800MHz spectrum for UMTS.
165.With little certainty on when this would be resolved, the government announced in the Digital Britain: Interim Report(6) that it was seeking a solution, either through a voluntary industry consensus or an imposed government solution. An Independent Spectrum Broker was appointed to take this work forward.
166.The Independent Spectrum Broker’s initial set of proposals were published on 13 May(7), and the government responded to these in the Digital Britain: Final Report(8). Although the government stated that it was minded to implement the proposals, further work by the Independent Spectrum Broker was required. This work has now been completed, following extensive engagement with the mobile operators and other interested parties.
167.It has become clearer during the latter phase of the Independent Spectrum Broker’s work that certain aspects of the Wireless Telegraphy Act 2006 (“the 2006 Act”) would need amending to implement some of the recommendations of the Independent Spectrum Broker.
168.The proposals put forward by the Independent Spectrum Broker require the application in certain cases of annual licence fees, including what is known as Administered Incentive Pricing, to spectrum that has been auctioned, including spectrum that has been relinquished by operators to conform to the spectrum caps referred to below and spectrum authorised for use by 3G licences extended from a fixed term to an indefinite term.
169.Under the proposals put forward by the Independent Spectrum Broker, a set of temporary spectrum caps will be put in place during the auction and for a limited period after to prevent any one person holding more than a specified amount of spectrum. Operators may therefore be in a position of having to relinquish spectrum in order to comply with these caps and the relinquished spectrum will be auctioned.
170.Where operators are required to relinquish spectrum in order to comply with temporary spectrum caps, time limits will be set for that release of spectrum within the wireless telegraphy licence conditions. It is important that this release happens in the timeframe set out to ensure effective competition is maintained. Licensees will also be subject to certain retail service and wholesale access obligations, in order to widen access to the spectrum. OFCOM’s existing powers to revoke or prosecute for breach of a wireless telegraphy licence condition may be disproportionate or insufficiently flexible to enforce the conditions which are proposed pursuant to a direction under section 5 of the 2006 Act to allow the timely reform of the spectrum.
Section 38: Payment for licences
171.Subsections (1) to (3) of this section allow OFCOM to make regulations under section 12(1)(b) of the 2006 Act which apply charges payable during the term of the licence to specified cases of wireless telegraphy licences allocated by auction. Section 12(5) of the 2006 Act, which includes power to impose charges payable during the term of the licence, does not apply to a licence allocated through auction.
172.Subsections (4) to (7) of this section allow OFCOM, with the consent of the Secretary of State, to make regulations under section 14(1) of the 2006 Act which will permit or require licences to which the regulations apply to provide for payments between operators in relation to licences auctioned under section 14 of the 2006 Act.
173.Under existing legislation, payments for spectrum at auction are made to OFCOM who must pay them into the Consolidated Fund. Under the Independent Spectrum Broker’s proposals, the proceeds from any 2.1GHz relinquished spectrum should go back to the operator who relinquished it, on the basis that they bought this at auction in 2000. There will also be additional payments between operators arising from the auction of other relinquished spectrum.
Section 39: Enforcement of licence terms etc
174.This section inserts a new section 43A into the 2006 Act giving OFCOM power to impose financial penalties for contravention of certain licence provisions, terms or limitations to which section 43A applies by virtue of a licence provision. A provision applying section 43A can only be included in a licence if it appears to OFCOM that a direction given by the Secretary of State under section 5 of the 2006 Act requires OFCOM to include a particular provision, term or limitation in the licence.
175.Under the current legislation, OFCOM’s powers in respect of breaches of wireless telegraphy licences are limited to prosecution where such breach amounts to an offence under Chapter 1 of Part 2 of the 2006 Act or to revocation of the licence.
176.OFCOM has power under sections 42 to 44 of the 2006 Act to impose financial penalties for contraventions of the terms, provisions or limitations of a general multiplex licence.
177.This section also amends section 400 of the Communications Act 2003, to ensure that financial penalties imposed by OFCOM under new section 43A are dealt with in a consistent manner to other similar penalties paid to OFCOM. Section 400 of the Communications Act 2003 requires the money received from certain penalties and charges imposed by OFCOM to be paid into the Consolidated Fund.
