Second Consultation on assessment of future mobile competition

To safeguard spectrum caps, Ofcom thinks it necessary to place some restriction in the auction. According to it, the amount or extent of the spectrum, a provider/bidder could win in the auction should be restricted.

Another proposal included in the March 2011 Consultation was that the bidders who have interest in shared low-power use at 2.6 GHz should be given the right to compete in the auction along with bidders who are interested in standard-power use for access of 2.6 GHz spectrum.

Rollout or coverage obligations During the March 2011 Consultation, it was made clear that for a large portion of the UK population, LTE and other advanced super fast broadband technologies should be made available. The speed at which the households and businesses are going to be provided with is yet to be decided. For this purpose certain coverage obligations are to be included in the auction to guarantee minimum coverage level. Regarding the non-technical license conditions, it was proposed that the non-technical licenses should be UK wide.

For individual standard-power licenses, subject to the impact of trade on competition, all types of spectrum trading should be permitted and with regard to concurrent low-power licenses at 2.6 GHz, only those trades that that do not increase the number of licensees would be permitted. The licenses will be for indefinite duration unless relinquished or revoked. Spectrum auction and packaging is so designed that it will support efficient assignment of spectrum.

During the March 2011 Consultation, Ofcom explained its proposal to auction the right to use the 800 MHz and 2.6 GHz bands as a combinatorial style as it had conducted auctions previously. In the auction, spectrum would be available in several categories of 2 x 5 MHz lots at 800 MHz, for individual standard-power use at 2.6 GHz a single category of 2 x 10 MHz lots and for low-power use by up to 10 concurrent licensees at 2.6 GHz a potential category.

Annual license fees for both 900 MHz and 1800 MHz spectrum would be in accordance with the Direction of the Government.

The level of license fees for 900 MHz and 1800 MHz spectrum has to be revised as per the Direction of the Government. This revision of license fees should reflect the full market value. Ofcom has to consider the sums bid in the auction for licenses for the 800 MHz and 2.6 GHz bands. Ofcom expects that the bids in the spectrum auction would provide the correct picture for fixing these fees.

During the second Consultation on the award of spectrum, Ofcom explained that it could reach upon a final decision regarding the license fees only after the auction and the regulator is ready for conducting another Consultation.

Modified proposals to endorse future competition in mobile markets
Considering the responses received to 2011 March Consultation, regulator revised its competition evaluation. This competition assessment is based upon Ofcom’s information, and is also consistent with its duties like furthering the interest of citizens, promoting competition in the communications market for the benefit of consumers and also the maximum use of spectrum.

Providing super fast broadband throughout the UK, encouragement to innovation and investment, ensuring the availability of choice, best price and quality service to the consumers at large are all the obligations of the regulator.

These obligations made Ofcom to consider whether any other measure is to be introduced in the auction to ensure competition in markets.

This revised competition assessment considers the competition immediately after the auction as well as the competition after 5 or ten years. This ten year period is considered to be long enough for new technology to be rolled out. After ten years what would happen, what would be the technical and market conditions, no one can predict with precision.

Such being the situation, Ofcom has to carryout competition assessment as per the direction of the Government. It will have to consider the evidence before it and at the same time give due allowances to the uncertainty element that would prevail in the mobile sector in future before taking a reasonable decision. Though there will be an element of uncertainty, Ofcom wants to minimize the risk of any regulatory failure. Considering its statutory duties, Ofcom believes that this option is the most appropriate one.