Department for Business, Innovation and Skills
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Government response to independent Spectrum broker's report

Government response to independent Spectrum broker's report

DEPARTMENT FOR BUSINESS, ENTERPRISE AND REGULATORY REFORM News Release (2008/158) issued by COI News Distribution Service on 13 May 2009

The interim Digital Britain report established a Spectrum Modernisation Programme to address a range of key issues around the transition to Next Generation Mobile Services.

In February, an Independent Spectrum Broker was appointed to determine whether a series of market-led spectrum trades between operators could be achieved to facilitate this objective.

The Independent Spectrum Broker has now concluded this process and has published his conclusions in a report and accompanying statement today.

The Minister for Communications, Technology and Broadcasting, Stephen Carter said:

"The Independent Spectrum Broker has concluded that there is a need to find a new comprehensive approach to enable the roll-out of Next Generation Mobile Services, which offer enormous benefits for the UK economy".

He added:

"This report addresses complex and challenging issues and demands careful consideration and we will be setting out our response in the final Digital Britain report next month."

Notes to editors
1. The Independent Spectrum Brokers' report can be accessed online at http://www.culture.gov.uk/reference_library/publications/6147.aspx

2. The Independent Spectrum Broker and his research team commenced work on February 4th 2009 and completed it on May 12th. The total cost for this work and the report was £62,500.

3. Digital Britain is the government's vision of an economy and society where core working activities are based around knowledge, skills and information. It represents an ambitious and strategic plan to accelerate growth in the digital industries and cement the UK's position as a world leader for innovation, investment and quality

4. The interim report was published in January and set out five key objectives for achieving that vision - to ensure and support:
- Upgraded wired, wireless and broadcast networks
- A dynamic investment climate for digital content and services
- Diverse sources of high-quality UK content for UK users
- Fairness or opportunity, accessibility and universality and promotion of digital skills and literacy
- Network and user capability to allow efficient digital public service

5. The report made 22 recommendations for delivering these objectives, including establishing a Wireless Radio Spectrum Modernisation Programme consisting of five elements:
- It should resolve the future of existing 2G radio spectrum through a structured framework, allowing existing operators to re-align their existing holdings, re-use the spectrum and start the move to next generation mobile services. This must be achieved whilst maintaining a competitive market. If this can be done, the economic value of the spectrum would be enhanced. Existing administered incentive pricing (AIP) levels would be adjusted to reflect that enhancement. The Government believes that an industry-agreed set of radio spectrum trades could represent a better and quicker solution than an imposed realignment. There is an opportunity for industry to agree a way forward by the end of April 2009. In the absence of an industry-agreed trading solution by then, Government will support an imposed solution.
- Making available more radio spectrum suitable for next generation mobile services. Ofcom has proposed the release of the so-called 3G expansion band at 2.6GHz. The Government will support proposals from Ofcom to play a key role in a pan-European alignment of the Digital Dividend Review Spectrum (the so-called Channel 61-69 band), being released by the progressive switchover from analogue to digital broadcasting, pioneered by the UK. This will free up radio spectrum particularly valuable for next generation mobile services.
- Greater investment certainty for existing 3G operators: The Government wishes to encourage the maximum commercially-sensible investment in network capacity and coverage. But the further into a fixed term licence one goes the greater the disincentive to invest. We want to resolve this issue now as part of the structured framework. As part of the structured trading framework existing time-limited licences could be made indefinite and subject instead to AIP beyond the end of the current term. If this were achieved the Government would look to ensure that the AIP then set reflected the spectrum's full economic value and hence would capture over time the return equivalent to the proceeds that would have been realised in the market from an auction for a licence of the same period.
- Greater network sharing: the Government and Ofcom will consider further network sharing, spectrum or carrier-sharing proposals from the operators, particularly where these can lead to greater coverage and are part of the mobile operator's contribution to a broadband universal service commitment.
- Commitments by the mobile operators to push out the coverage of mobile broadband eventually to replicate 2G coverage and mark their significant contribution to the broadband universal service commitment.

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