Release of the 700 MHz spectrum band for mobile data in 2020
Background
The widespread use of smartphones and tablets has led to a large growth in demand for mobile data services. Ofcom (the communications regulator) states that total data traffic across networks in recent years has been growing at around 60% per year.[1]
Ofcom is responsible for allocating the frequencies for what is referred to as the radio spectrum to different mobile operators. To do so it allocates licences – effectively licences to transmit radio waves over defined frequency ranges.
The Wireless Telegraphy Act 1998 (as amended) enabled the use of auctions to grant licences, where appropriate.
The first UK spectrum auction was in 2000 for 3G mobile phone licences and raised £22 billion.[2]
The second auction was in 2013 and auctioned radio spectrum licences in the 800 MHz (megahertz) and 2.6 GHz (gigahertz) frequency bands to provide spectrum for new 4G mobile services in the UK. This auction raised £2.34 billion.
In November 2014, Ofcom decided to make the 700 MHz band available for mobile data.
In July 2015, Ofcom set out that an auction was expected on 190 MHz of radio spectrum being transferred from the Ministry of Defence to civilian use. 40 MHz is located in the 2.3 GHz band and another 150 MHz above 3.4 GHz and this spectrum is suitable for mobile broadband uses. This auction was delayed by proposed mergers between EE and BT and between Telefonica UK and Hutchinson 3G UK.[3] On 20 July 2016, Ofcom provided the following update on this auction:
Following the European Commission's decision to block the proposed acquisition of O2 by CK Hutchison (H3G), Ofcom intends to publish in the autumn a further consultation on competition measures and on specific aspects of auction design for the award of the 2.3 and 3.4 GHz spectrum bands.[4]
Release of the 700 MHz band for mobile data
In November 2014, Ofcom decided to make the 700 MHz band available for mobile data. This is part of Ofcom’s broader strategy to ensure that sufficient spectrum is available to meet projected increases in demand for mobile data. The 700 MHz band is currently used for Digital Terrestrial Television (DTT); wireless communication for theatrical, musical and sporting events (referred to as audio Programme Making and Special Events or PMSE services); and white space devices (WSDs).[5]
In Budget 2015, the Government announced that it would provide up to £600 million funding to support the delivery of the change of use of the 700 MHz spectrum:
1.125 The government will provide up to £600 million to support the delivery of the change of use of 700MHz spectrum, which will further enhance the UK’s mobile broadband connectivity. These funds will support the infrastructure costs of clearing the spectrum frequency, including support to consumers where appropriate, and retuning broadcast transmitters to enable broadcasters to move into a lower frequency. This will free up 700MHz spectrum for 4G mobile communications use through an auction next Parliament. The government will also centralise the operational management of public sector spectrum, and will reset the release target.[6]
Ofcom expects to auction mobile licences for the band in late 2018 or 2019.[7] A statement from Ofcom on 17 October 2016 stated that it planned that the 700 MHz band will be available for use by no later than Q2 2020:
Our objective is to make the band available for mobile as soon as practicable, by 2022 at the latest. On 11 March, we published a consultation on maximising the benefits of 700 MHz clearance. This set out proposals which would enable us to bring forward the point at which this spectrum is nationally available for mobile data to a target of no later than Q2 2020.[8]
Ofcom’s analysis in 2014 and 2016 includes the following benefits of making the 700 MHz band available for mobile use by 2020:
- Mobile network cost savings from deploying fewer base stations;
- Improvements in mobile performance in hard to serve locations;
- Potential for lower consumer prices;
- Extending data coverage;
- Potential for new services or technology to be deployed in the band.
In its Report on Establishing world-class connectivity throughout the UK, the Culture, Media and Sport Select Committee concluded that better coverage for mobile will be achieved through the release of the 700 MHz band and others:
The Government and Ofcom have worked well together to secure investment from the mobile network operators to achieve agreement on reaching a 90% geographical coverage by 2017. Ofcom has successfully designed spectrum auctions so that coverage obligations are a key part of these exercises. The Government will undoubtedly achieve better coverage for mobile through the release of 700 MHz band and others once they become available. When these bands are auctioned there will clearly be a trade-off between spectrum price and the obligations on the licence holders. To facilitate investment by the operators, the Government may well need to place additional emphasis on achieving coverage, and on the role that mobile will play in meeting the universal service obligation for broadband, rather than primarily maximising revenue from the auction.[10]
In its Response to this Report, the Government stated:
With regards to spectrum, the role of spectrum auctions is not primarily to raise revenue but to allocate scarce spectrum where demand is likely to exceed supply, as has generally been the case for mobile networks. The issue of how 700 MHz spectrum will be allocated and the terms of 700 MHz licences are for Ofcom in the first instance; Ofcom has already indicated in its Strategic Review of Digital Communications (initial conclusions, February 2016, pp. 4, 26) an intention to look at coverage obligations in 700 MHz licences.[11]
For detailed information on the impact of the changes needed to release the spectrum (around DTT and PMSE services) as well as more detail on the potential benefits, please see the Ofcom Statements on Maximising the benefits of 700MHz clearance (2016) and Decision to make the 700 MHz band available for mobile data (2014).
[1] Ofcom Statement, Maximising the benefits of 700 MHz clearance
[2] BBC News, UK mobile phone auction nets billions, 27 April 2000 [accessed 10 November 2016]
[3] Ofcom, Public Sector Spectrum Release, updated 3 December 2015
[4] Ofcom website, Spectrum Management: Ongoing Projects
[5] Ofcom Decision, Decision to make the 700 MHz band available for mobile data. Note that WSDs are innovative new devices which are able to identify and make use of previously unused gaps in frequency bands.
[6] HM Treasury, Budget 2015, HC 1093
[7] Ofcom, Strategic Review of Digital Communications, initial conclusions, February 2016, para 1.15
[8] Ofcom Statement, Maximising the benefits of 700 MHz clearance
[9] Ofcom Statement, Maximising the benefits of 700 MHz clearance
[10] Culture, Media and Sport Committee, Establishing world-class connectivity throughout the UK, 19 July 2016, HC147 2016-17, para 57
[11] Culture, Media and Sport Committee, Establishing world–class connectivity throughout the UK: Responses to the Committee’s Second Report of Session 2016–17, 12 October 2016, HC 714