UK Radio Spectrum Auctions Hang In The Balance

Efforts to offer new services on little-used parts of the UK’s radio spectrum may hit difficulties this year, as a proposed auction of spectrum licenses will be put off until next year, by which time a Conservative government may have abolished the regulator, Ofcom.

The UK’s telecoms regulator Ofcom has long had plans to hold an auction for two chunks of radio spectrum, some around 2.6GHz which was originally planned for use by 3G mobile services, and some around 800MHz. However, these auctions and other moves have run aground on political indecision, according to speakers at a public discussion run by Westminster Media eForum.

The issue of spectrum has become a “policy-making orphan”, according to Kip Meek, a former Ofcom policy maker, who was appointed as independent spectrum broker by the government after Lord Carter’s Digital Britain report last year, and has been trying to get the stalled spectrum auction process going since then.

“I don’t think there will be an auction this year,” said telecoms lawyer Rod Kirwan, of Denton Wilde Sapte, adding that it was unlikely any would happen in 2011 either. BT has written a letter threatening legal action over some of the changes that Ofcom is making to spectrum licenceses to clear the way for spectrum auctions, extending a delay set up by T-Mobile and other existing mobile operators back in 2008.

The auction design looks like being very complicated, making it expensive to understand and take part, so the auction will favour the existing telcos whose pockets are deeper than others who might want the spectrum. These include broadcasters and those with social uses for the spectrum, or those wanting to use the spectrum for rural broadband coverage, warned Tony Lennon, president of the broadcasting union BECTU.

“We are a year away from the biggest release of a public asset in a generation, and we still don’t know what to do,” said Lennon. Because the government had decided that “the most profitable solution is by definition the most socially useful”, he warned that the winners would clearly be the telcos, because their market is orders of magnitute bigger than that of the broadcast media.

“Operators want to hoard spectrum, in order to lower their costs, not to improve services,” warned Maurice Patrick, a telecoms analyst at Barclays Capital. Already, other technology of the spectrum, such as radio microphones in the 800MHz range are being made obsolete in order to create a big band that can be sold, said Lennon.

The Conservative Party has said that, if elected this year, it will scrap the broadband tax that the government hopes to use to pay for increasing broadband speeds. The Conservatives have also threatened to abolish Ofcom, which would throw the whole auction process into question .