22nd September - Opening up mobile spectrum to support innovation and competition

Ofcom today announced proposals for consultation to open up the radio spectrum bands used by mobile phone operators to allow them to launch new services and technologies and to promote competition.

Mobile devices are now central to our everyday lives, with Ofcom research showing nearly 70 million active mobile subscriptions in the UK, and an increasing number of people using their mobile to access the internet.

The proposals for consultation are designed to allow more efficient use of the spectrum that underpins all mobile services. Allowing more flexibility in using this spectrum, and wider access to it, could bring many benefits to consumers, including:

- Greatly improved rural coverage
- Mobile broadband, including faster web browsing and faster downloads of video and music
- Greater interactivity
- Better quality indoor coverage
- Lower prices
- The proposals for consultation

The consultation covers the spectrum used by Vodafone, O2, T-Mobile and Orange for their 2G networks. In line with the existing European GSM Directive, the licences for this spectrum presently limit its use to 2G technology, which supports voice calls, text messaging and low-speed internet services.

Ofcom proposes to liberalise the use of this spectrum, by removing the restriction to 2G. This will be required by a forthcoming European Commission decision which states that 2G spectrum should be freed up for a much wider range of uses, including high-speed mobile broadband services using 3G.

Two different bands are presently used for 2G: 900 MHz is used by Vodafone and O2 only; 1800 MHz is used by all four 2G operators. The consultation looks at how these spectrum bands could be used for 3G and other technologies, and the effect that changing the use of these key spectrum bands could have on competition and consumers.

The key points are that:

• Liberalising the spectrum could bring very large benefits to citizens and consumers, as it will allow major improvements to be made at low cost to the capacity and coverage of 3G networks. Ofcom estimates the benefits to the UK of liberalising the 2G spectrum could be in the order of £6bn.
  
  
• Almost all of these benefits are likely to flow from use of the 900MHz band. This is because it is lower frequency than the other bands used for mobile services, making it particularly good for providing 3G services in rural areas and delivering such services inside buildings. In addition, equipment using 900MHz for 3G services is now starting to be manufactured.
  
  
• In particular, future 3G services rolled out using 900MHz would require far fewer mobile phone masts than if higher frequencies were used. It would be possible to build a high quality mobile broadband network covering 99 per cent of population using around 10,000 fewer sites per operator.
  
  
• The 900MHz band is likely to be so important that we should ensure that more operators have access to this spectrum in future. Wider access is needed to ensure that competition and innovation continue to thrive in the UK mobile sector.
  
  
• For these reasons, Ofcom is today proposing that some spectrum currently used by Vodafone and O2 for 2G services should be released for use by others in future.

• restrictions on the use of the band should be removed, allowing it to be used for 3G and other technologies, and making it tradable;
  
  
• most of the spectrum should be retained by Vodafone and O2, for use for their 2G and/or 3G services;
  
  
• some spectrum should be released by each of Vodafone and O2, to ensure that in future other operators also have access to the band;
  
  
• the amount of spectrum released should be enough preferably to allow three additional operators to access the band; and
  
  
• the spectrum that is released will be awarded by Ofcom, probably using an auction as that is likely to be the best way to find the most effective users of the spectrum.

The award could be held as soon as 2009 with the winners potentially able to use the spectrum from 2010. Liberalisation of the remaining spectrum would take place at the same time. Participation in the award would be limited to parties who do not already hold 900MHz spectrum.

These changes can be made without affecting quality of service for existing 2G and 3G customers, through careful preparation and planning.

Other licences

Ofcom also proposes to remove technology-specific restrictions on the use of the 1800MHz band as soon as possible, and to make licences tradable, giving the current holders the option to transfer rights to use the spectrum to another party. These changes could take place in 2008.

Similar changes could also be applied to the spectrum band currently used for 3G services, at 2100MHz. Licences for this band are currently held by Vodafone, O2, T-Mobile, Orange and Hutchison 3G.

Ed Richards, Ofcom Chief Executive, said: “We can’t see it, touch it or hear it, but radio spectrum is central to our lives and we are using mobile devices more than ever before.

“Our proposals are designed to make more spectrum available for high-speed mobile broadband services across the whole of the UK and to ensure that the UK mobile market continues to be one of the most competitive and innovative in the world.”

1. The table below shows which operators currently have access to the three main spectrum bands used for mobile services, and which services they are able to offer in each.

2. The following table shows how this would change as a result of the introduction of Ofcom’s main proposals.

* 2G services include voice telephony, text messaging and narrowband internet applications. 3G technology also offers voice telephony and text messaging. However, internet bandwidth is greatly increased so enabling a host of services such as audio and video downloads and faster web-browsing.