Award of spectrum: 1452-1492 MHz - Information Memorandum

Published 7|12|07

Executive summary

1.1 This Memorandum provides information for those parties considering bidding for a licence under the Wireless Telegraphy Act 2006 (“WT Act”)to establish or use stations for wireless telegraphy or install or use apparatus for wireless telegraphy in the 1452-1492 MHz band in the United Kingdom (referred to in this Memorandum as a "Licence").

1.2 In particular, this Memorandum:

describes the characteristics of the Spectrum Band for which Licences are to be awarded, and the way in which the Spectrum Band will be packaged;
summarises the principal terms of the Licence(s) that will be issued following the completion of the Award Process;
summarises the steps that persons need to take to qualify and take part in the Award Process; and
summarises the rules and timetable applicable to the Award Process.

1.3 The following table presents a summary of the packaging of the Spectrum Band for the Licences, the rights and obligations under the Licences to be issued, and the rules for the conduct of the Award Process.

Spectrum Packaging
Number of Licences	The following Lots will be auctioned for use within the United Kingdom: 16 lots of approximately 1.7MHz each in the 1452-1479.5 MHz sub-band corresponding to blocks LA to LP in the Maastricht 2002 Special arrangement (as revised in Contantata in 2007 1 lot of 12.5 MHz in the 1479.5-1492 MHz sub-band.
Coverage	All the Licences will be UK wide excluding the Channel Islands and the Isle of Man
Wireless Telegraphy Rights & Obligations
Licence conditions	The Licences will be service and application neutral.
Co-ordination	A Licensees will be expected to comply with all relevant international agreements in particular: The Maastricht 2002 Special Arrangement; and The ITU Radio Regulations
Licence restrictions in 1452-1479.5 MHz	The Licences will contain technical conditions in the form of a Spectrum Usage Right (“SUR”) defined by aggregate in-band and out of band Power Flux Density (PFD) limits. Two types of Licence are available for the Lots in 1452-1479.5 MHz: Licences defined by the High Power Licence Condition - High power-low density: a transmitter density limit of 150 transmitters in any 50km x 50km square (but no power limit beyond any required to comply with the international arrangements) will apply; and Licences defined by the Low Power Licence Condition - Low power-high density: an EIRP limit of 6kW for any transmitter in a single 1.7 MHz channel (but no transmitter density limit) will apply Compliance with the Licence will be determined through modelling using an agreed propagation model.
Licence restrictions in 1479.5-1492 MHz	The licence will be an SUR defined by in-band and out of band PFD limits. Satellite coordination will be in accordance with the ITU Radio Regulations
Guard blocks	If determined by the Auction there will be a guard block of 3.4 MHz between a Licensee in the 1452-1479.5 MHz sub-band with a Low Power Licence Condition and a Licence in the same sub-band with a High Power Licence Condition or between the licensee in block LN and the licensee in 1479.5-1492 MHz. These guard blocks will have no initial rights of transmission
Industry codes of practice	Licensees in the 1452-1479.5 MHz sub-band will be required to agree two industry codes of practice to define methods and procedures for the co-ordination of transmitters to help mitigate adjacent channel interference. There will be one code for Licences with High Power Licence Conditions and another for Licences with Low Power Licence Conditions. In addition Licensees in LP and in 1479.5-1492 MHz will be required to agree a code of practice
Licence term	Each Licence will have an indefinite duration, but we will not revoke it for spectrum management reasons with less than five years' notice. Each Licence will have an initial period of 15 years in which our revocation powers will be limited. We may revoke a Licence before the end of that 15 year period for other, limited, reasons specified in the Licence.
Licence fees	The Award Process will determine the licence fee for the first 15 years. If a licensee continues to hold a Licence after 15 years, additional licence fees may be payable in line with our spectrum pricing policy at that time.
Spectrum trading	Each Licence will be tradable (i.e. we will allow the rights and obligations in the Licence to be transferred). We will allow all types of trade (partial or total, and concurrent or outright).
Award Mechanism & Rules
Basic award process	The award take place over four stages: an application stage; a qualification stage; an Auction stage, which will comprise a combinatorial clock auction consisting of one or more Primary Bid Rounds and a Supplementary Bids Round during which Bidders can bid for a package of one or more specific Lots and nominate their preferred usage; and a grant stage during which we will grant Licences to the Winning Bidder or Bidders The procedure will be partially different if there is only one Bidder at the end of the qualification stage.
Determining the Winning Auction Stage Bids	The winning bids will be the Valid Auction Stage Bids that comprise the Winning Combination of Auction Stage Bids. The Winning Combination of Auction Stage Bids will be the Compatible Combination of Bids having the highest total value of amounts bid. A Compatible Combination of Bids means any combination of Valid Auction Stage Bids: where the combination includes at most one Bid from each Bidder; where each Lot is selected in not more than one Bid; and where any two Bids within the combination have different choices of Licence Condition (e.g. one Bid is for a Licence with a High Power Licence Condition and another Bid is for a Licence with a Low Power Licence Condition), the frequencies which are comprised within at least two Lots which are not selected in any Bid within the combination separate the Lots selected in the two Bids where the different Licence Conditions have been chosen.
Determining the Winning Bidders	The Winning Bidder(s) will be the Bidder(s) that submitted the Winning Auction Stage Bids.
Pricing rule	We will determine the licence fee payable by each winning bidder using a ‘second price’ rule.
Minimum prices	The Winning Prices to be paid by Winning Bidders will be no less than: For blocks LA-LP: £50,000 each For block LQ (1479.5-1492 MHz): £150,000
Transparency	There will be an application process for participation in the award process, and the identities of all applicants taking part in the award will be made public. Comprehensive information about the number of bids for each usage right for each lot will be released after each round. At the end of the auction details of all Valid Auction Stage Bids made by each Bidder, the names of the persons to whom the Licences were granted, the selection of Lots included in those Licences, the Licence Condition assigned to those Licences and the details of the Licence Fees paid will be published.
Prohibitions on Bidder association and collusion	There will be specific rules to prohibit Bidder association and collusion. If separate applications are received from two or more associated organisations they will be required to disassociate, or withdraw all but one of their applications, in order for any of them to qualify to bid in the Auction.
Deposits	Applicants will be required to submit a cash deposit of £50,000 at the time of application. At various stages during the Auction Bidders may be required to increase the amount of their deposits.
Unsold Licences	We will retain the discretion to grant any Lots not granted through this Award Process, after completion of the process, and in a manner that we will determine.

Ofcom’s duties and functions

1.4 We have powers under the WT Act to grant licences for wireless telegraphy, and to do so through an auction. Our duties in relation to the award of licences are set out in the WT Act, and are derived from the requirements of European Union legislation.

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